Introduction
In the 1990s, ERP and shared services concepts fuelled the emergence and growth of centralized finance and accounting, HR, procurement, and other business functions. Since the turn of the century, offshore labor arbitrage has driven a new round of cost savings by lowering the human costs of performing the associated services. The use of offshore has begun to reach saturation with organizations looking for further ways to cut costs and achieve additional objectives, such as improved service, optimized processes, and reshoring. The next wave of cost savings is gathering pace and is increasingly focused on replacing manpower with technology in service delivery.
The insurance sector is particularly under pressure with a number of factors simultaneously impacting it. These include macroeconomic pressures such as low interest rates, regulatory changes increasing the cost of compliance, and the rise of the digital consumer. The drivers for change in the insurance industry have never been greater.
This report first examines the broad area of service delivery automation (SDA). Then, it delves into a subset of Service Delivery Automation (SDA), Robotic Process Automation (RPA) and its application in insurance services. It provides a scenario-based business case for adopting RPA in insurance services.
The analysis covers:
- Fundamental principles and definition of SDA and RPA
- Drivers for automation in the insurance sector
- The benefits of RPA
- An overview of the scenario used in calculating the business case for SDA
- Potential cost reduction due to offshoring insurance processes
- Potential cost reduction due to deploying RPA
- Impact of RPA in insurance processes
The scope and methodology of this report includes:
- RPA in insurance sector-specific business processes, excluding back-office processes and automation in IT services.
Content
This report examines the benefits of using Robotic Process Automation (RPA) in insurance services. It takes a scenario-based approach to quantifying the major benefits of RPA and to calculate the business case for the given scenario. In addition to that, it sets out a few fundamental principles and definitions for key automation technologies to help organizations learn and plan for this new development.
Below are select highlights of the report:
Principles of Service Delivery Automation (SDA) are:
- Automation – at its most basic level – must utilize technology to replace a series of human actions
- Much automation is already embedded in software systems
- Service delivery automation can be accomplished by combining multiple technologies
The market:
- Four major factors in the insurance market are driving the need for more cost-effective processes:
- Macroeconomic pressures
- Regulatory changes
- Rising incidents of fraud
- Rise of the digital consumer
- The changing market landscape and the continuous pressure on costs are driving the demand for automation, with the insurers seeking a significant change in efficiency and performance
- RPA technology is emerging as the biggest disruptive force to drive benefits across multiple dimensions – cost savings, efficiency, accuracy, scalability, and regulatory compliance
The value proposition:
- Based on a common enterprise scenario, Everest Group estimates cost savings that offshoring and outsourcing of insurance process can deliver
- Based on this scenario, Everest Group estimates the business case for RPA in insurance services, which can further reduce insurance process costs by 11% to 22%
- Barriers to adoption include concerns about cost of change, lack of knowledge about RPA, and preferences for not getting locked in to a single technology provider
