Without automation, an extra 50 FTE in back-office: insurance companies aiming for productivity

Unlike other industries, which have been capable of capitalizing on their investments in technology, insurance  has not improved its overall productivity over the last ten years, according to McKinsey & Company (1). A competitive and cost-saving environment prevails and improving performance is nonetheless on the agenda for many insurance companies, welfare associations, provident institutions and other professionals in protecting property or people. It is indeed a priority!

How do we explain this? The advisory firm attempts an explanation by harshly judging the strategies that are in place:  “Compared to other activity sectors, insurance has not yet structurally addressed the problem of   its  operating costs”, although more efforts are being made by operators in life insurance than in comprehensive insurance.

Automation as a lever

The efficiency of each process (such as subscription or  loss management) and the excellence of customer experience in their interactions with their insurance company are ”the key elements of the new equation”, explained McKinsey.

This has led to investments by operators in the sector in terms of  digitization of the relationship with insured parties (introduction of omnichannel, self-service, etc.), modernization of business applications (to upgrade their historic core systems) or process automation (via technologies such as AI, RPA or BPM).

Furthermore, this automation is being encouraged by the control authority, with the President of the Prudential Supervision and Resolution Authority (ACPR) urging insurance companies (and banks too) to   explore automation routes even further  to  achieve new productivity gains and new customized services (2). And while some operators are blazing a trail in this area, others are still dragging behind, McKinsey analysts note.

Mutavie, almost all processes automated

A subsidiary of the Macif Group,  Mutavie began to automate in 2005. Today, almost all its processes are partially or fully automated.

Let’s look at the example of subscription to a new life insurance policy. Prior to automation, its processing represented labor time of around 10 minutes; after automation, less than 30 seconds are necessary, with excellent data quality, explained Sébastien Poiblanc, Director of Customer Relations & Management, at the 2019 ITESOFT Symposium.

And he added: From the point of view of profitability,  one point of automation gained represents one FTE. Without automation, I would be operating with an extra 50 FTE in my back-office.

 

Sources: (1) McKinsey & Company, ”The productivity imperative in insurance” (August 2019) (2) ACPR, Annual  Report 2018 (May 2019)