Insurance industry jobs most threatened by automation

Technology adds many benefits to our daily lives including convenience, communication, and productivity. Technology makes both life and work easier, but it also poses some risks. Most notably, businesses utilize technology to its fullest capacity, which in turn leads to automation replacing human jobs. If artificial intelligence can improve productivity while decreasing operating costs, then most businesses welcome its use over that of a human. What about insurance jobs? On the surface, insurance jobs seem technical in nature, however, many remain at risk of automation. This article explores the use of technology in insurance in an effort to determine its benefits, limits and the jobs most at risk of automation.

Technology in claims management

Technology has led to significant improvements in streamlining the claim management process. Managing claims, such as those handled by property adjusters, often involve long manual processes. Adjusters use a significant amount of time gathering information. Tools such as digital measuring devices, photography drones, google maps and others provide property adjusters with tools that minimize the amount of time necessary for an adjuster at a claim site. This means that an adjuster can communicate and adjust a significant portion of a claim from his or her computer without sacrificing the quality of the claims experience.

New technologies, like blockchain, are further revolutionizing the industry. Blockchain is a distributed database existing on multiple computers at the same time. This database is constantly growing as new sets of data, or ‘blocks’, join the chain-like Legos. Each block contains a timestamp and a link to the previous block, such that they form a chain. Among other benefits, blockchain technology allows further streamlining of the claims process. Insurtech is a broad term that references the disruptions in the insurance industry. At first, many businesses implemented this technology behind the scenes as a part of their support operations. Now, however, new startups use this technology to simplify the insurance buying process.

Insurance jobs at risk of automation

Technology allows for significant improvements in the operations of property and casualty insurance markets. The use of blockchain, artificial intelligence, and insurtech lead to advances, however, there are side effects to replacing jobs previously held by humans with insurtech automation. Below are a few examples of insurance jobs at risk.

• Agents – Smart contracts enabled by blockchain minimize the amount of effort an insurer and customer exert in the policy purchase process. Artificial intelligence allows insurers to generate pre-populated risk profiles, which in turn allow a customer to purchase a customized property insurance policy in a matter of a few minutes or even seconds. This is evident in the emergence of new Insurtech startups offering policies with only a few clicks. Simplifying and automating the policy purchase process means that fewer agents and account representatives are necessary to handle insurance applications.
• Underwriting – Historically, underwriting has been a manual process, which requires insurance company personnel to distinguish between good risks and poor risks. With blockchain technology, insurers aggregate and analyze data from a variety of sources to make split-second underwriting decisions. Long hours of underwriting research are not necessary due to this new technology.
• Claims adjusters – Blockchain technology eliminates much of the manual data processing required for claims adjusters. Many estimates indicate that with blockchain technology insurers can improve claim processing speed and cost by three to five times. With these improvements, insurers do not need the same amount of adjusters to manage claims.
• Fraud detection – According to the Insurance Information Institute, insurers indicate that fraud accounts for five to ten percent of claims costs. As a result, insurers often pour resources into fraud detection personnel. With blockchain and other artificial intelligence technologies, insurers automate anti-fraud jobs previously held by humans. Below is a CB Insights chart that details how blockchain assists in the fraud detection process.

Benefits of technology

• Operational efficiency – The use of blockchain and insurtech automates processes that historically were manual and time-consuming. As a result, businesses improve output with the same amount of input, thereby increasing productivity and reducing costs over time.
• Information security – While cyber risks exist, blockchain enables data security, which is not possible with traditional recordkeeping processes in the insurance industry.
• Claims processing – Technology automation enables the use of real-time data, which leads to improvements in claim handling efficiency.
• Smart contracts – Blockchain technology enables smart contracts, which contain data automatically executed when various predefined conditions exist.

Limits of technology

While technology leads to operational improvements, it cannot achieve every action necessary in the industry. Therefore, some insurance jobs have a low risk of replacement from technology. Property adjusters, for example, must express empathy in communication with claimants. Technology is unable to express emotion the same way that humans can. Effective claim management requires that property adjuster understand emotions and provide a proper response to connect with claimants and improve claim satisfaction.

Reducing stress is key when dealing with homeowners immediately following a loss. This is evident in recent advertising from several insurers attempting to differentiate themselves from new Insurtech companies. Technology cannot replace the human touch necessary in the role of a property adjuster. While technology will replace some adjusters, others will become more productive, and those capable of establishing and maintaining relationships with clients are more likely to survive in the long-term. Some other insurance jobs depend very much on judgment, such as risk managers. Businesses have varying risk appetites and risk managers must work with senior leaders to determine an appropriate insurance portfolio and limits. Technology also requires insurance company employees to have insurance industry knowledge and an understanding of evolving technology. In short, technology leads to changes in the job descriptions and expectations of insurance employees. When workers learn and evolve as the industry changes, the risk of technology replacing their jobs decreases significantly. Below is a list of risks and limitations associated with technology.

• Cyber exposure – The insurance industry understands the risk associated with cyber-attacks, however, as the industry becomes more and more dependent on blockchain and artificial intelligence, its exposure to a cyber loss increases.
• Data security – As the insurance industry uses more data, it must consider the risks associated with maintaining the integrity of this data. If errors or compromises in integrity exist, then fraud may occur.
• Development costs – The use and implementation of technology in the insurance industry is expensive. Businesses must have a long-term view in order to justify the investment in this technology.
• Privacy – Similar to cyber risks, as insurance companies automate and store more data, privacy is more and more a concern. If a third party compromises a business’s IT system, a customer’s private data could become public.

Technology continues to be a massive disruption in the insurance job market, but human connection matters in this industry. Human decisions, judgments, and emotions remain critical components involved in connecting insurers and customers. Businesses must be aware of the risks associated with technology to appropriately adapt and use it effectively in their organizations. Business leaders must also train and equip employees to evolve their skill sets as technology changes persist in the workplace.