Introduction

Insurance is fundamentally based on a promise: the insurance company promises to indemnify a policy holder in the event of a covered loss. Central to this promise is the need for claim review and assessment, which requires a unique blend of technical knowledge, policy understanding, and people skills. While automation can assist in the administration and processing of claims, certain roles within the insurance industry are inherently resistant to full automation due to the complexity and individual variances involved.

The Role of Technology in Insurance

The introduction of technology in the insurance industry is intended to simplify and streamline processes, ultimately making the job easier for humans. Every technological wave has historically eliminated repetitive and predictable jobs while creating more high-quality positions for humans. For instance, in recent years, there has been a significant shift in the workforce due to technological advancements.

A recent McKinsey Report highlights this transformation. According to the report, just 33 percent of the insurance workforce will be centered in operations within a decade, down from 46 percent in 2015. Further, 10 percent of the workforce will focus on administrative reports, down from 18 percent in 2015. Product development, marketing, and sales support would also see a minor decrease, from 21 percent to 20 percent within the same period. IT positions are expected to decline from 15 percent to 12 percent over the next decade.

The report suggests that declines could be more pronounced in more saturated markets where business volumes are declining, leading to redundant IT positions. However, there could be an increase in higher-value positions, such as marketing and sales support for digital channels and analytics teams that detect fraud.

Automation in Underwriting

One of the more discussed areas of automation in insurance is underwriting. Automated underwriting systems can certainly handle routine and straightforward tasks, but the specialized skills required for complex risk assessment and pricing cannot be fully automated. Expert underwriters must analyze the broader picture, considering factors that cannot be quantified by algorithms alone.

For instance, a basic underwriting process can include data collection, analysis, and decision-making based on predefined criteria. However, an underwriter needs to evaluate the context and nuances of each application. Factors such as the policyholder's background, specific circumstances, and potential risks are difficult to encompass in a purely automated system. Underwriters must continually learn new skills and stay updated with the latest software tools to analyze and understand data in conjunction with their professional experience.

Claim Adjusting and Assessment

Claim adjusting and assessment is another area that is less likely to be fully automated. The extent of property damage evaluation and time loss assessment involve subjective judgment and require a deep understanding of the nuances of each case. While automation can help with data entry and basic calculations, it cannot replace the human touch required to accurately assess a claim. Claim adjusters must communicate effectively with policyholders and other stakeholders, negotiate settlements, and ensure that claims are processed in a fair and timely manner.

Moreover, claim adjusters often need to make decisions based on incomplete or conflicting information. They must deduce what a fair settlement should be, taking into account factors such as damage severity, policy coverage, and potential liability. This requires critical thinking, empathy, and the ability to navigate complex situations. These skills are highly valuable and are unlikely to be fully automated in the foreseeable future.

Marketing and Sales Support

Despite the expansion of digital channels, traditional marketing and sales approaches remain crucial in the insurance industry. Personal interaction, relationship building, and tailored solutions are essential for fostering customer loyalty and driving business growth. Sales professionals and marketers must understand their clients' needs and preferences, personalize their approach, and provide compelling value propositions. While technology can assist in data analysis and automation of some administrative tasks, the human touch is invaluable in closing deals and resolving concerns.

In conclusion, while technology has the potential to revolutionize the insurance industry, certain roles will remain highly resistant to automation. Underwriting, claim adjusting and assessment, and marketing and sales support are areas that benefit from human expertise and cannot be fully replaced by machines. As the industry evolves, professionals in these fields must continue to adapt and enhance their skills to remain relevant and effective.