Insurance distribution transformation – how insurance carriers can adapt to the new normal with AWS

With physical distancing and other quarantine measures put in place because of the COVID-19 pandemic, the activities once considered critical to have in-person are shifting to digital and remote channels. This change is also affecting the insurance industry. Having face-to-face interactions with customers has been challenging during this period and the distribution channels have faced the brunt of this. Remote working has been one of the key obstacles that agents and distribution partners are facing in building customer relationships. The industry is still very paper-intensive and information is siloed across different functions and systems. Many insurance carriers struggled to have the right solutions in place for virtual on-boarding of customers across channels when Covid-19 hit. For carriers, the key imperatives during the pandemic have been business continuity, customer and employee support, and maintaining growth by supporting distribution partners.

This pandemic has highlighted the need for digital capabilities and transformation in order for insurance carriers to be able to effectively serve their customers. In parallel, carriers have been faced with a challenge to identify the right product strategy for digital channels, understanding customer needs and transforming their current legacy infrastructure to meet these requirements.

In this blog post we will cover the challenges that carriers are facing, some of the areas of innovation that they can focus on to transform their business, and finally how can AWS help carriers in this journey.

Re-thinking insurance distribution

Insurance carriers need to re-look at their distribution strategy in a holistic manner, covering customers and distribution partners, as well as internal capabilities, and not look at these as part of discreet programs. Carriers need to adjust their distribution strategy to: 1) up-skill their sales force to utilize new digital capabilities, 2) create new digital-first products, and 3) enable seamless experience across all channels.

The sales cycle for insurance products will likely not change drastically. It will still go through the lead generation, product research, needs analysis, quotation/application, underwriting and issuance processes. However, insurance carriers need to identify new and innovative ways to transform each of these steps. Carriers should look to leverage data to better understand their customer needs and preferences and be able to continuously add to the data set across all customer interactions. The goal is to create a flywheel effect – capturing data from digital interactions enables carriers to derive insights into customer behavior, leading to the ability to deliver more personalized experiences that in turn lead to more digital interactions.

Figure 1: Customer Engagement Flywheel

In the following sections we’ll cover some specific areas of innovation that carriers can look at and that AWS can help with.

Digital capabilities for customers and agents

With a greater demand on self-service and digital engagement, customer experience is becoming a key competitive differentiator for carriers. Digitally enabling their sales force and providing customers with enhanced self-service capabilities and omnichannel experiences is being considered a key to future success. AWS is helping insurance carriers in this area in the following ways:

• Self-service with digital assistants: More and more customers (especially GenX and GenY) are demanding self-service capabilities. Different customers have different expectations from their carriers. While some are looking to do their own research and go through the buying process on their own, others prefer to reach out to sales teams and/or call the contact center to get details about the product. Carriers can look at integrating chatbots, voice-bots, and natural language processing (NLP) with their existing or new solutions to help with both types of customers. Integration of chatbot features like Amazon Lex with AI-based search like Amazon Kendra can help reduce the load on the contact center, freeing customer service representatives to focus on complex queries and improving Net Promoter Scores. To learn how to integrate Amazon Lex chatbot with Amazon Kendra intelligent search service, refer to this blog post.
• Digitally enabling the sales force: In parallel to developing new digital channels, carriers need to ensure they also focus on digitizing their current sales force. Moving to online digital services will not entirely remove the need for agents, brokers and other intermediaries and partners. They will continue to play an important role in the customer experience. Empowering the sales force with new digital tools and enabling them to work remotely and effectively should form part of the distribution strategy. Carriers can use Amazon Chime SDK to integrate real time communication components such as audio, video and screen sharing with their own applications and enable virtual engagement for their sales teams. To learn how to leverage Amazon Chime SDK and Amazon Chime Media services for your own video conferencing application, refer to this blog post.
• Omnichannel experience: In today’s world, customers want to be able to interact with their carriers across multiple channels: in-person, web, mobile, phone, social media, and digital assistants, and they are looking to seamlessly move from one channel to another. As an example, a customer initiating a conversation through the contact center may want to speak to an agent to better understand the product features and in this process the customer expects not to have to repeat themselves. Carriers will need to leverage data to identify the preferred mode of communication with customers and provide the means to switch between different channels. AWS services such as Amazon Lex, Amazon Kendra, Amazon Connect, Amazon Amplify AWS AppSync, Amazon Chime SDK can help insurance carriers develop a comprehensive digital capability across the organization to be able to effectively and efficiently serve their customers and partners across channels. Following are some steps you can take to achieve this:

1. 1. Create your Agent and Customer websites and mobile applications using Amazon Amplify and Amazon API Gateway. Run the business logic using AWS Lambda
   2. Integrate video conferencing capabilities into your Agent portal by leveraging the Amazon Chime SDK and the back-end Amazon Chime Media Services.
   3. Add chatbot capabilities to your portals by using Amazon Lex. Connect your Amazon Lex chatbot to Amazon Kendra intelligent search service to automatically search through your knowledge base and respond to customers. You can also integrate Amazon Kendra directly into your portals as a search bar.
   4. Leverage Amazon Connect contact center to answer customer queries over the phone and integrate its IVR capabilities with AWS Lambda functions to intelligently query your databases and systems to provide customized answers to your customers.
   5. Provide customer service over Amazon Alexa-compatible devices, by creating your own Alexa skill and integrating it with your backend systems with AWS Lambda.

Figure 2: Architecture of omnichannel capabilities for customers and agents

To learn more about how to create a multichannel experience as a financial services company, refer to this blog post. You can also learn how Farmers Insurance is elevating customer experience with conversational AI using such services.

Leveraging data and AI/ML to personalize interactions

Customers today expect their carriers to understand and anticipate their needs. This is why carriers need to look at consolidating data across both internal and external sources and using that data to derive insights about their customers and offer more personalized experiences. AWS is helping carriers do this in the following ways:

• Golden customer record: Carriers today are faced with the challenge of data silos making it difficult for them to understand or predict customer behavior. Carriers need to put in place a data strategy across the organization focused on building a golden customer record and Customer 360 view. They should look to leverage both internal and external data sources in order to better understand their customer buying behavior and be able to personalize interactions with them.
• Personalization: Customers expect their carriers to understand their needs and requirements. Their expectations are stemming from their experiences in other industries. With a good understanding of their customer needs, a carrier can provide personalized product recommendations and launch personalized sales campaigns, which can lead to an increase in sales along with an increase in customer satisfaction.

AWS services such as Amazon Pinpoint and Amazon Sagemaker can be used by carriers to personalize product recommendations and communications. The recommendation engine suggests the appropriate product or customer journey and, through integration with the customer communications management system, sends the website visitor an email or SMS text with a link to where they can pick up their search where they left off. Following is one way this can be achieved:

1. Create a data lake following the Lake House architecture on AWS. Store data in Amazon S3 and allow your data engineers to leverage AWS Analytics services like Amazon Athena, Amazon Redshift and Amazon Quicksight to get insights about your customers. Allow your data scientists to use Amazon Sagemaker to create custom AI models using the data available in the lake.
2. Use Amazon Pinpoint to send personalized marketing campaigns and integrate it with a custom recommendation model created by your data scientists.

Figure 3: Architecture of how to leverage Data and AI/ML to personalize interactions

Learn how HDFC Standard Life Insurance runs a life insurance recommendation engine behind its website, supporting an enormous volume of visitors.

Process automation leveraging AI and ML

Another area that carriers need to focus on is intelligent processing, which leverages AI and ML technologies to not just automate business processes but also to convert data from documents into useful information. Following are some examples:

• Electronic Know Your Customer (eKYC): Identifying and verifying customer identity is one of the key steps in the insurance buying process and also a mechanism to manage fraud and anti-money laundering. As insurance carriers ramp up their digitization efforts, AI/ML can be used to reduce the effort required for identification and authentication processes, whilst also reducing the likelihood of fraudulent activities and false positives. To learn how to leverage Amazon Rekognition to improve fraud detections in financial services, refer to this blog post.
• Digital on-boarding: Many insurance processes still require customers to complete manual paper-based applications. As insurance carriers look to transform their business processes, they should also consider digitizing the customer on-boarding process utilizing services such as chatbots and voice bots along with natural-language processing and text extraction to capture data points from digital interactions that can be mined for insights. To learn more on how to automate document processing with Amazon Textract, Amazon Comprehend and Amazon Augmented AI, refer to this blog post.
• Automating the underwriting process: Given the current pandemic, customers are hesitant to have in-person visits – be it for a medical examination or an inspection/evaluation for home and contents insurance. Carriers need to look at alternate means of underwriting the risk. They need to start leveraging data from sources such as IoT devices, health devices, videos and photographs, drone videos, and data from external sources to underwrite the policies.

AWS services such as Amazon Textract, Amazon Rekognition and Amazon Comprehend can be used to help automate document processing and underwriting in the following ways:

1. Amazon Rekognition can allow for a digital on-boarding journey of a new customer by implementing a liveness check at registration and comparing a customer’s video feed with for example. a national ID picture.
2. You can allow for paper document processing during on-boarding by leveraging Amazon Textract to extract text and Amazon Comprehend to analyze and understand text and map it to necessary fields. You can also integrate your document processing journey with Amazon Augmented AI (A2I) to add human review in to the loop and ensure the most accuracy.
3. You can create a custom underwriting model using Amazon Sagemaker and integrate Amazon A2I to ensure human review before updating the underwriting system.

Figure 4: Architecture of process automations which leverage AI/ML services

You can learn how to leverage Amazon Rekognition to set up full digital on-boarding while improving fraud prevention with this blog post. You can also see how insurers and financial organization are re-defining the way they process documents in this blog.

Building an ecosystem of partners

With a focus on digital transformation, insurance carriers will need to look at how best to build and leverage the ecosystem of players in the market — be it insuretechs, distribution partners, marketing organizations or affinity channels. By focusing on developing an API ecosystem, carriers will be able to effectively connect to both technology enablers and distribution partners.

Insurers can easily create responsive websites and mobile applications using Amazon Amplify for the front-end and Amazon API Gateway with AWS Lambda functions for the back-end. The business functions, product features and calculations can be exposed as APIs via the Amazon API Gateway, and the same can be accessed by the partner ecosystem to enable ease of access of product features, pricing and business processing.

Holistic reference architecture

The following reference architecture diagram shows an example of how carriers can transform their insurance distribution with AWS services by implementing omnichannel capabilities, enabling on-boarding automation with straight-through processing, and improving customer experience with analytics and machine learning.

Figure 5: Reference architecture for insurance distribution transformation

How can AWS help?

In order to drive this transformation, today’s insurance companies are retiring technical debt and making cloud services available to small teams of architects and developers, enabling them to more quickly deliver innovative solutions to the business. Using AWS services, carriers can quickly launch new digital customer experiences; modernize or put in place more agile core systems; leverage data to take new approaches to identifying risk and deliver personalized insurance products; and nimbly respond to regulatory changes. AWS has programs such as AWS Data Lab that can accelerate your data and analytics modernization initiatives and Amazon Machine Learning Solutions Lab that can help you identify and build ML solutions. Carriers can leverage AWS Professional Services, or choose from one of our AWS Financial Services competency partners to help them in their journey.

Conclusion

In this post we covered the challenges faced by carriers today and how they can work across use cases to transform their distribution processes and better engage with their customers and partners. While insurers look to adopt new technologies and solutions, they should evaluate their current capabilities and processes and come up with a roadmap, keeping in mind the up-stream and down-stream impacts. AWS has the services and mechanisms to help carriers not only build and implement new processes quickly, but also to develop an overall strategy. In addition, AWS has the right partner network to support the journey. For further details, contact your Account Manager or AWS Sales Support.