What will the title insurance industry be like in 10 years? Increasing investment in automated workflows will streamline business processes. Digital Transformation has swept the world. This megatrend has changed how claims are processed, research is performed, and risk is managed. Every time this type of change occurs by incorporating new digital workflows, there is the potential for a dramatic impact on the industry – in this case, the insurance industry. Greater use of process automation in the Title Insurance industry has the potential to drive big change. This will create new efficiencies impacting not only business operations but how entire enterprises operate.
What Might the Title Insurance Look Like in Ten Years?
Several digital trends are likely to play an important role as new technologies continue to become more widely adopted. Customers will have access to more data to compare and contrast various policies. This will streamline the purchase process. Underwriting processes will also be streamlined for efficiency improvement. Risk assessment must be simplified.
Greater use of intelligent, automated processes that utilize predictive analytics will deliver new efficiency gains and risk reduction. And regulation enforcement is expected to be streamlined given the wealth of data that can be readily accessed, audited, and evaluated with automated systems.
It is no secret that the insurance industry is risk-averse. New technologies or business models are not quickly embraced. Rather, a more defensive stature is the norm. Innovation is only adopted after considerable evaluation and assessment. We are now seeing growing reliance on automation in the Title Insurance industry. This trend is expected to be replicated in greater scope and across other insurance industries.
Cost Pressure is Driving Digital Investment
Industry profit margins are declining. Higher operating costs are now impacting industry profitability. This trend was only exasperated during the pandemic. Another factor has been the lack of overall productivity improvement. According to a research paper published by Dr. John Hindle & Dr. Leslie Willcocks, Becoming Strategic with Intelligent Automation, “… investments in automation have generally not improved overall productivity [of the Insurance industry] in the last ten years. While investments in automation have boosted labor efficiencies, overall cost ratios have not improved. Addressing this issue alone, the industry is ripe for structural changes.”
The authors shared metrics from a McKinsey study stating that the top 20 percent of insurance providers take nearly all the industry’s profit. The reasons cited were effective cost containment, significant economies of scale, and highly standardized business models.
Cost Cutting Isn’t Enough
Despite early progress seen by investing in process improvement and optimization, the industry won’t capture lost profits by just improving efficiency. A much broader perspective is needed that starts with heavy investment in digitalization and automation. The industry challenge is more of a structural issue that will require substantial business transformation.
The top 10 largest Title Insurance companies, as measured by premiums written in 2020, captured 88 percent of the total market. The top firm, First American Title, has double the volume of transactions as the second-ranked firm, Old Republic National Title. Look to see further consolidation as competition continues to intensify. The firm(s) that can effectively transform how their businesses operate and can both scale faster and perform with greater efficiency will end up being tomorrow’s winners.
Case Study Example
A National Title Company client of Axis Technical Group was challenged with slow document processing times, manual data entry errors, and increasing labor costs. To start their intelligent process automation strategy, they implemented a document classification and data extraction solution that leverages artificial intelligence to steadily improve the performance of automation in the Title Insurance industry. The following success was achieved post-implementation:
- Title clearance time was reduced from 2-4 hours to just 20 minutes
- A 10x reduction in manual data entries was also achieved
- The solution can now scale to process up to one million transactions a week – a level of scalability that can provide the company with an ability to quickly scale up operations when the next expansion cycle starts
Read the full case study here, National Title Company Dramatically Cust Data Extraction Time
Looking to the future, these performance gains delivered efficiency improvement that was necessary to stay at par with industry profitability. Further actions are still required to achieve industry leadership.
For example, how can these process improvements be applied to other departments? How can lower resource utilization positively impact staffing shortages for departmental projects by providing opportunities for new projects to be completed? And how can this information be better centralized and made available to other business units?
A “Center of Excellence” team is one way these benefits can be scaled. This type of structure provides a way to deliver a far greater impact on overall enterprise profitability – provided the IT systems are in place to support such a strategy. Centralized teams can apply new technologies and the infrastructure for intelligent process automation to deliver labor productivity gains and other automation-led performance improvements.
It is this type of thinking and investment planning that is needed to drive future expected performance improvement in the entire insurance industry, not just Title Insurance providers.