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Automation in the insurance industry

29 March 2022 · By Ana Navarrina

In recent years, and particularly since autonomous vehicles have become a reality, we often hear the phrase “someday soon, cars will drive themselves”. But how long will it actually take for this to happen? Does the car industry have any idea? And most importantly, what does this have in common with the insurance sector?

Autonomous vehicles and the insurance industry

One thing’s for sure, we’re still years away from autonomous vehicles entering the mainstream. After all, you can’t go from zero to a hundred overnight. That said,  keeping track of progress and reflecting on the corresponding steps to be taken is essential. In order to facilitate this process, the car industry has come up with a standard, as outlined in the image below. 

As the chart shows, the migration from manual driving to complete autonomy will be somewhat gradual. The standard itself sets out six distinct levels, each with a slightly greater level of automation. It is hoped that these guidelines will serve as a  baseline for the car industry and enable it to move towards its end goal.

The insurance industry, on the other hand, had not come up with such a standard. Until now, that is. 

The four levels of VILA

There are multiple processes in the insurance industry that demand high levels of human intervention at present. However, there are plans to progressively automate many of these operations over the coming years.  Therefore, this definition of levels of automation that already exist in the car industry is also essential for the insurance sector to move forward. With this in mind, it was termed crucial to come up with something similar, hence the creation of VILA (Visual Intelligence Level of Automation).

Let’s take the example of claims management, which comprises three key steps: the gathering of evidence, damage detection, and cost estimation.

The VILA standard, created by Julio Pernía, CEO of Bdeo, sets out four levels of automation for this particular process:

The groundbreaking technology that enables us to move from one level to the next is Visual Intelligence, a form of Artificial Intelligence that is transforming the insurance sector. 

As the table shows, in VILA 01, the insurer uses Visual Intelligence solely for evidence collection. However, in VILA 04, Visual Intelligence technology is used throughout the entire process, from reporting to deductibles, damage identification to cost estimation. 

VILA essentially serves as a roadmap for the insurance industry. It enables key stakeholders to understand the sector’s current position, identify what it can aspire to, and work out exactly how to get there. As Ruth Puente, COO of Bdeo, puts it, “it’s difficult to achieve something if you don’t know your end goal or where you’re starting from.”

In the case of claims management, the main goal is always to offer the policyholder a top-notch user experience, which is where Visual Intelligence comes in. However, that’s not to say that automation guarantees good customer service.

VILA and the human factor

Experts agree that it’s virtually impossible to automate each and every process. It’s estimated that around 70% of all insurance claims will be processed automatically in the future (80% in the case of underwriting). This will enable brokers to focus their time and attention on the 30% of cases that require claims adjuster reviews (although Visual Intelligence can also play an important part in these cases) and in other areas where they can offer added value. 

All of this is set to significantly improve the policyholder experience. If the claim is easy to analyze and resolve, then automation saves the policyholder valuable time. If the claim is more complex, the policyholder’s team will be able to offer an improved service since they will have more time available to dedicate to said case. It’s a win-win situation.

In a recent conversation between Bdeo and Zurich Mexico, Pedro Muro, Head of Claims at Zurich Mexico, emphasized the benefits of Visual Intelligence for insurance companies, highlighting the reduction in time and costs for both the broker and the policyholder. “In the insurance world, everything we do is geared towards the benefit that the end customer will receive,” explained Muro. “When you integrate technology into your workflow that brings about a reduction in your operating costs, which means you’re able to offer the client a more competitive price.  If this process also brings about an improvement in terms of quality of service thorough time savings, then the policyholder perceives that we were able to respond incredibly quickly to their case.”

The current VILA of the insurance sector

During the aforementioned webinar, the following question arose: How far is the insurance industry from reaching VILA 04?  "To put forward an exact timeframe would be very risky. It should be noted that this process, in the mid-to-long term, will evolve in accordance with user experiences. It’s like exercising. We can train to be athletes over time, but it takes practice and perseverance, ” stated Pedro Muro.

Julio Pernía also pointed out that “automation does not mean the same thing for every company. What’s more, in order to automate 100% of processes, there would have to be an ideal situation that does not currently exist. Instead of striving to achieve 100% automation, we must be pragmatic enough to work on models that allow us to work out when a case can be automated and when it cannot, which client will appreciate a face-to-face service and which a digital one.”

At last, the insurance sector has a standard that will enable it to continue making huge strides toward the maximum possible levels of automation. But let’s take it one step at a time, let’s follow the lead of the autonomous vehicle.

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