When IBM introduced its original PC in August 1981, threatening to wipe out the little companies that were already in the market, Steve Jobs had upstart Apple take out a full-page ad in the Wall Street Journal whose headline was: "Welcome, IBM. Seriously." The cheeky ad helped brand Apple, and we all know that the story had a happy ending for the company: Its market value now exceeds $1 trillion, while IBM, whose market cap amounted to three-quarters of the entire computer industry's in the early 1980s, now stands at less than an eighth of Apple's value. 

A modern-day ad fight has now started in the insurtech world, as State Farm tweaked Lemonade, and Lemonade responded. State Farm has begun running TV ads that mock Lemonade (by implication, though not by name) and its use of chatbots to interact with customers.  Here is the ad, suggesting that Lemonade's technology is no match for State Farm's 48,000 agents. Lemonade responded via a more modern medium (natch), tweeting:  "Wait,  @StateFarm , did you just fork out millions of your customers' premiums on an attack ad against  @Lemonade_Inc  and bots? As in, the country’s biggest insurance company is feeling the heat and getting A-listers to bash technology?" Lemonade has even paid to promote the video on YouTube and via other social channels, claiming the ad has backfired on State Farm.

We think the companies are on a crucial topic, so, rather than have them just retreat to their corners, a la Apple and IBM back in 1981, or simply amp up their ad budgets, we're inviting them to a public debate via webinar that we would moderate. We just reached out last night, so it may take a while to sort this out, but stay tuned for details. In the meantime, I'm going to start a discussion on the topic in the Inventing the Future of Risk and Insurance group that I moderate on our Innovator's Edge platform and that you can find here. (If you haven't already signed up for free access to IE, you can do so quickly here.) I'm going to invite to the discussion some heavy hitters among both incumbents and insurtechs.

I'm not so interested in who will win the marketing fight or whose business model is better—though the two companies could probably sell tickets to the fight, along with a lot of popcorn. I'm very intrigued by how quickly technology should be integrated into interactions with customers. 

I've had a long-held bias against things like chatbots because I first had people singing the praises of natural language processing to me in the mid-1980s, when I started covering the technology world for the Wall Street Journal, and NLP was so very not ready for prime time. Even with all the improvements since then, chatbots still lack empathy -- they'll immediately tell you how to fill out the forms to collect on a life insurance policy but not really grasp how to deal with someone who has just had a family member die. Chatbots learn, but...  a Microsoft bot set up on Twitter had to be quickly shut down  because it learned racism and cussing, not exactly what Microsoft had hoped. The potential for abuse is such that  California recently enacted a law  requiring that chatbots identify themselves as AIs if used in selling or in politics. 

Still, I much prefer dealing with companies via chat—no wait time, no getting passed around; I can keep doing whatever I'm doing on my computer and just interact as necessary. And the use of technologies such as chatbots fit the Clay Christensen model of disruption, which I think is mostly right. He says disruption happens when an innovator takes over a slice of the business that isn't very complicated and doesn't matter much to incumbents, then grabs another slice and another and.... In the case of chatbots, I think there are plenty of things that could be handled faster by technology and that the agents would be happy to hand off, such as questions about when a payment is due, whether it has been received and what the status of a claim is. Then the chatbots can grow from there. McKinsey has done lots of work showing that automation doesn't wipe out entire jobs; it automates pieces of jobs, in this case the more mundane aspects of agents' work and of call centers.

But State Farm and Lemonade could surely change my thinking. As I said, stay tuned. 

Paul Carroll
Editor-in-Chief

The duty of insurers is not to deny the need for new standards but to dedicate themselves to standardizing new—and superior—levels of safety. Why should they insist on doing otherwise, when the technology exists to heighten safety and lower costs; when the cost of doing business as usual looks safe but is far more dangerous than it appears to be; when cameras can reveal—and record—what workers cannot see for themselves? Why should insurers resist what trial lawyers will soon insist be the exclusive standard of safety, by way of multimillion-dollar settlements and verdicts? Why should insurers persist in their wait-and-see attitude, when they can see what lies ahead? The questions speak for themselves. If insurers do not like the answers, they should remind themselves that sometimes the refusal to answer a question is worse than acknowledging that an answer is true. Which is to say nothing is static; technology can make change easy to adopt or extremely hard to avoid. Take my column about workplace safety. Consider this piece, then, a continuation of my conversation with Chris Machut of Netarus, whose company develops innovative solutions for overhead cranes, tugboats and construction sites. See also: Let’s Open Our Eyes to Work Safety Issues   Machut is a visible—and vocal—advocate for using cameras to help workers see everything that matters. He says what matters most is what insurers can do now: champion the adoption of crane cameras so “policies can be more expansive without necessarily being more expensive; because safety translates into saving lives; because life-saving tools facilitate success; because success is more than the sum of even the largest sums of money.” I agree with Machut, not because I think or hope he is right, but because I know he is right. I know that knowledge of a danger—and the construction industry is, if nothing else, a study in danger—is often the key to liability. If real estate developers know how dangerous it is to add a chapter to the story of the history of a city, to measure that chapter not in pages but in stories, if they know the dangers of including another building to the skyline of their city; because they do know these things, insurers should seek to lessen the number of payouts by lowering the probability that they will have to pay out in general. If awareness is a given, how do we give workers the ability to see farther, thanks to an aide that neither weakens nor tires, that neither succumbs to the tedium of the task nor surrenders to the trials of exertion, that neither leaves the job site nor loses its sight? The answer is visual technology. In a word: cameras. Cameras represent a new standard in safety. See also: Awareness: The Best Insurance Policy   To debate that fact is to miss the point—and to possibly drop the beam or steel girder, injuring workers and pedestrians alike. To doubt the urgency of this point is be vulnerable to lawsuits and bankruptcy. To adopt this standard is for insurers to mitigate risk and to minimize danger. It is too dangerous for insurers to ignore this standard.

How do you increase the efficiency of your underwriting processes? In this post, I will showcase a solution for a fully automated underwriting process consisting of roughly five steps—solving major challenges in structuring, extracting and analyzing unstructured data.

In this series on how to boost your AIQ, I’m exploring innovative ways to apply artificial intelligence to the insurance value chain. In my first post, I spoke about the artificial intelligence quotient (AIQ), which consists of these key ingredients: technology, data and people and the ability of an enterprise to invest significantly in their in-house AI capabilities and collaborate externally. To achieve success, insurers need to develop these capabilities: both in-house and collaboratively. In my second post, I explained how insurers should start with carving out a clear AI strategy to be able to understand which use cases can be most relevant and conducive to achieving their strategic goals, and focused on the application of AI-related technologies to boost sales and distribution. In this post, I’ll explore how insurers can leverage AI in underwriting and service management. How can insurers use AI in underwriting and service management? Sixty-eight percent of insurance employees expect intelligent technologies to create opportunities for their work, and 63% of insurance executives believe AI will transform the industry. In underwriting and service management, we see several relevant use cases for which insurers could leverage AI-related technologies:

• Extraction of insights from multiple data sources (including unstructured)
• Automated demand analysis and generation of new product offerings
• Enhanced pricing and policy rating and personalization
• Natural language question answering for employees.

These offer the following benefits:

• Efficient and lean underwriting processes — robo-advisers streamline the process of customer interaction and data gathering, while data analytics helps insurers to make better-informed decisions.
• Improved hit and retention ratios — owing to better insight derived from data analytics and machine learning.
• Increased risk evaluation quality — smart technology increases not only the quantity of information that underwriters and risk managers need to make decisions, but also the quality of the decisions.

In the use case below, I’ll discuss a solution for a fully automated underwriting process consisting of roughly five steps—solving major challenges in structuring, extracting and analyzing unstructured data. Use case: End-to-end automation of business processes from unstructured data input From this diagram, we can see that everything in the journey from data input to output can be automated using a selected set of AI-related technologies. This doesn’t mean that there’s no place for humans in this journey; the workforce will likely need to pivot to become trainers, explainers and sustainers (for more about these roles see our Future Workforce Survey for Insurance ). As AI pervades the insurance industry, "raising" and training intelligent machines to function efficiently and responsibly will become a critical role and a significant creator of jobs at different skill levels. See also: Insurers: Start Boosting Your ‘AIQ’   “Next best action” guidance —how to leverage data insights for your clients’ needs So you’ve structured your unstructured data, and you have more information about your customers’ needs. Many insurers fail to capitalize fully on their data – how can you use it optimally to deliver personalized products and services along the appropriate channels? We have developed a 360-degree customer view for insurers to offer the right product via the right channel through "next best action" recommendation engines. The Accenture Next Best Action (NBA) app shows how insurers can deliver personalized offerings that cover the customer’s predicted growing insurance needs and wants. NBA empowers businesses with a real-time and customized decision-making service that provides relevant and timely offers to drive value. NBA is a data analytics-based marketing solution that provides inbound and outbound touch points with a customer recommendation engine to drive additional revenue. NBA has been shown to achieve a 30% to 45% increase in cross-sell and up-sell. How? The recommendation engine draws on available data to present insurers with a full overview of the best actions to be pursued, allowing them to respond to the needs of customers across a wide range of situations. What is NBA?

• A decision paradigm uses a combination of predefined business rules and advanced analytics to recommend a next best action.
• For each interaction, NBA identifies the best proposition to be presented to the customer with an acceptable degree of predictability about the behavior or response.
• Integration of all communication channels, inbound and outbound, ensures a consistent customer experience.

See also: How to Use AI, Starting With Distribution   What’s next –Insurance executives plan to make significant AI investments in the next three years as they start to “rotate to the new”—transform and grow their core business through the adoption of AI, while developing innovative sources of growth. Are you ready to transform how your business leverages AI-related technologies for the underwriting and service management activities in your value chain? To find out how you can do this, download the report on How to boost your AIQ. In my next post, I’ll look at how insurers can leverage AI-related technology to improve claims management.

Historically, technology adoption within commercial lines organizations has been met with a wall of push-back, largely related to commercial lines being wrapped in a cloak of “art versus science” thinking. Because of risk and product complexity, commercial lines organizations believed that only highly trained and seasoned humans could be involved with processes and decisions. Additionally, due to the predominance of large, enterprise-scale projects, characterized by protracted ROI exercises and IT resource allocation exercises, past technology choices generally brought out the “yeah buts.” (What are the “yeah buts”? This is the response to enterprise technology options, to which commercial lines product and underwriting heads promptly responded – “yeah, but that doesn’t work for us.”) In many cases, this was not an inappropriate response because of risk and product complexity. But, at long last, there is a change afoot, and it lies within emerging technologies. SMA has been conducting research and surveys around emerging technology since 2010 to gain insight and understanding of insurance industry adoption and spending. In the past, results have predominantly trended across the P&C industry. However, the recent 2018 results reveal clear differences between commercial lines and personal lines organizations.  Even more exciting, commercial lines product segment and transactional differences are emerging. As the phrase goes: Vive la difference! See also: Expanding Into Commercial Lines   So, what does all this mean? SMA’s recent report, Emerging Tech in Commercial Lines: Ramping Up Adoption, covers eight emerging technologies that hold great promise for commercial lines organizations: artificial intelligence (AI), new user interaction technologies, the Internet of Things (IoT), drones, blockchain, autonomous vehicles, new payment technologies and wearables. How are commercial lines organizations viewing these technologies? Here are some examples that show emerging technologies are being viewed uniquely by varying commercial lines segments and processes:

• AI – This technology garners the highest percentage of implementations of all the emerging technologies by almost twice the other categories, with 26% indicating so. Investment in AI exceeds the next closest emerging technology by more than 24 percentage points. The difference: It can drive straight-through processing for small business and simple specialty lines and support complex decisions for middle market, large national/global accounts and complex specialty lines. “Art versus science” well managed!
• New User Interaction Technologies – This is another technology that is affecting small commercial lines as this product segment goes digital. But 67% of all responders see the value in customer experience, regardless of product segment, and 50% are focused on policy servicing.
• Blockchain – While personal lines organizations are generally assessing the applicability of blockchain, commercial lines have found use cases and pilots. 42% of survey respondents believe that policy servicing and billing are the significant value areas. Global and complex lines of business are the first target areas.

See also: Top 5 Themes in Commercial Lines   Other emerging technology examples and spending projections can be found in SMA’s commercial lines report. But the big takeaway for me is that, happily, the “yeah buts” are disappearing across commercial lines of business and products as executives search for and find emerging technologies that can improve business outcomes. Because of the way emerging technologies are being delivered by incumbent and insurtech providers, discreet value choices can be made without having to launch enterprise-level projects. Vive la difference!!!

In a rapidly changing industry, some P&C insurers are pulling ahead of their competitors by focusing on customer satisfaction and retention. “The insurance industry as we know it is at the edge of a new business environment,” says  Michael Costonis , head of Accenture’s global insurance practice. “Breaking away from the pack and capturing new revenue opportunities requires a shift in business mindset – a shift from product-focused to customer-focused.” Customers want extra benefits, and one way to provide them is to offer value-added services. Travel companies and other insurance branches are already exploring the benefits of value-added services for retaining customers, as  Jamie Biesiada  at Travel Weekly points out. Because P&C insurers have been slower to adopt this strategy, however, many opportunities for capitalizing on this strategy remain. Here, we look at some of the most popular value-added services in P&C insurance, which of these services focus on building loyalty and how to create the right service offerings or packages to encourage your customers to stay with your company in the long term. Value-Added Services: The State of the Industry For many years, P&C insurers have struggled with the challenge of selling a product that is substantially similar to their competitors’ products. “Because customers don’t discern much difference between insurers, companies end up competing largely on price,” write Bain & Co. partners Henrik Naujoks, Harshveer Singh and Darci Darnell . A downward spiral occurs, in which costs and profits are cut and customers jump ship the moment they see the same coverage for a few dollars less. See also: How to Build Customer Loyalty in Insurance   When insurers compete on price, customers do what Brandon Carter at Access calls the services shuffle: quitting or threatening to quit their insurance providers to access the same price-lean deals that new customers receive. “My goal is to pay less in a system that actually punishes people for being loyal customers,” Carter explains. Focusing on cost decimates loyalty. Focusing on value can boost it. Yet insurance companies aren’t making value-added services their first choice when it comes to customer retention  Tom Super, director of the P&C insurance practice at J.D. Power, adds that many P&C insurers are turning to digital tools to court customers, particularly in the auto insurance business. But digital technology is only a tool. The insurers that will stay ahead of their competitors in the race for customer retention and loyalty are the ones that best leverage that tool to provide the value customers want, says Mikaela Parrick  at Brown & Joseph. Which Value-Added Services Boost Customer Loyalty? Value-added services provide an extra benefit that enhances the core product or service. This additional service may be offered at little or no cost for the customer, yet it may make both the customer’s and the insurer’s work easier. Connecting experience-based services to the product and brand can be a powerful way to encourage loyalty, adds Roman Martynenko , the founder and global executive vice president at Astound Commerce. While this approach is most commonly seen in retail, P&C insurers can adapt it to their needs. A top-of-the-line mobile app or a personalized starter kit featuring smart tools for each customer’s home can make customers feel like they’re part of a family. Unique, innovative or specially tailored value-added services can also help encourage loyalty and boost customer interest by becoming a cornerstone of an insurance company’s brand. Value-added services don’t have to be expensive or complex, suggests Mike McGee of Investment Insurance Consultants. For instance, a disaster preparation email sent at the start of tornado or hurricane season can help customers take loss-prevention steps, address safety and feel supported by their insurer, at very little cost to the insurance company. Partnering with other companies can boost loyalty for both organizations while providing value-added services that attract customers, digital transformation executive Fuad Butt says on the IBM insurance industry blog. For instance, working with telecommunications providers to offer reduced-rate packages can help both companies succeed. A highly specific partnership that uses existing technology to add value for both customers and companies is the recently announced alliance between Hyundai Motor America and data analytics firm Verisk. “Hyundai customers will have access to their portable Verisk driving score, which can lead to discount offers on UBI programs and support driver feedback that helps improve their driving,” says  Manish Mehrotra , director of digital business planning and connected operations for Hyundai Motor America. A similar arrangement through an auto insurer can help both insurers and drivers have access to more information to improve safety and make better choices. Choosing and Implementing Value-Added Services in P&C Insurance The changing landscape of insurance offers one significant advantage to companies seeking to improve their value-added services: access to data about why customers remain loyal. “The connections that enable excellent customer experiences aren’t always easy to make,” says Chris Hall of Pitney-Bowes. Siloing fragments customer information, leaving staff without a complete picture of each customer. This fragmentation makes it difficult to determine which value-added services will actually pique customers’ interest. If data access is an issue, start by de-siloing information to get a better sense of each customer. Then, find the services that best support your organization’s key differences from your competitors. Kirk Ford , compliance and T&C manager at RWA Business, suggests first considering how you’d like your clients and customers to perceive your brand in relation to competitors. Balance your differences against your similarities so that customers see they’ll receive all the services they need, but with the value-added extras that make their relationship with this particular insurance company meaningful. See also: The Future of P&C Distribution   However your insurance organization chooses to add value, resist the urge to announce it to customers merely as being higher-quality. “It doesn’t matter whether or not a company can pull off quality or exceptional service because quality and customer service rarely are differentiating strategies,” adds  Mac McIntire , president of the Innovative Management Group. Instead,  Ryan Hanley  formerly of Agency Nation, now at Bold Penguin, recommends finding ways your value-added services can improve customer lives. When customers feel a sense of shared values, they’re more likely to stick with their insurance company, rather than risk their luck with a company that may not share those values—even if the prices are lower. One way to connect with customer values is to change your company’s language surrounding insurance. “If you can sell insurance and not talk about insurance, it’s a win-win,” says  Rusty Sproat , founder of Figo Pet Insurance. He notes that many customers find insurance language obscure and frustrating. That’s why Sproat’s company focuses on providing quality information on pet care and health, switching the conversation to insurance only when necessary to complete a transaction. Finally, don’t shy away from technology—but use it as a tool rather than a cure-all. Smart home sensors, telemetrics for vehicles and other tech tools are increasingly common in U.S. households, plus they can greatly improve the customer experience, says  Ramaswamy Tanjore  at Mindtree. Consider the best ways to manage telemetric or other data, as well as how to position these tools to best showcase their value to loyal customers.

New entrants seem to be coming out of the woodwork in insurance. The insurtech movement, the advance of emerging technologies and the appetite of the global tech titans are all contributing to new entrants, new partnerships and new business models. A few recent examples illustrate the new interest in insurance from those both inside and outside of the insurance industry.

• WeWork partners with Lemonade. In what seems like a very natural partnership, WeWork plans to offer its WeLive members renters’ insurance through Lemonade. WeLive members rent fully furnished apartments from WeWork for short-term situations.
• Credit Karma enters insurance. This fintech intends to build on customer relationships to expand into auto insurance. While the initial focus will be education – helping Credit Karma customers understand how credit and adverse driving affects insurance rates – the longer-term goal is to provide yet another shopping/comparison site.
• BMW and Swiss Re partner for ADAS scores. BMW Group and Swiss Re will collect telematics data from vehicles related to the use of ADAS (Automated Driver Assistance Systems) and build scores that can be used by primary insurance companies.
• Lending Tree buys QuoteWizard for $370 million. Fintech Lending Tree, which has been on a buying spree, moves into insurance with the acquisition of insurance comparison shopping site QuoteWizard.
• Travelers partners with Amazon for the smart home. Travelers will set up a digital storefront on Amazon featuring smart home devices for a discount (especially security-related devices) as well as discounts on homeowners’ insurance.
• JetBlue invests in insurtech Slice. This appears to be a pure investment play, but it is still interesting that an airline would be following insurtech and seeking investment opportunities.

Something is going on here. It is not as if there have never been new entrants or that companies from other industries have ignored insurance. But the flurry of activity and innovative partnerships, investments and market approaches may represent a bigger trend. Insurance is transforming, and, despite some of the doom and gloom warnings, a case can be made that there is more opportunity than ever for the industry. Even in the examples provided above, the emphasis is more on new opportunities than displacing incumbent insurance players. Indeed, in the Swiss Re and Travelers cases, the incumbents are part of the new partnerships – and these are just two of many examples. See also: 5 Cs of Transformation in Insurance   One of the main themes of the examples highlighted above is the attention on distribution and customer relationships. While insurtechs are working with insurers on many opportunities to improve underwriting, claims, and other areas, so far the new entrants from outside the industry don’t appear to have the appetite to underwrite risk and handle claims. This may change, but it is likely that there will be even more interest from outside insurance in capitalizing on customer relationships. Above all, these new entrants and innovative partnerships serve to accelerate the transformation of insurance.

While executives have come to understand that happy employees mean satisfied customers, they often miss the other side of the coin. Poor customer experience creates a toxic environment for employees. Are you trying to create a great customer experience in your organization? If you’re focusing on your customers to accomplish that, then you’re already missing half the story. That’s because the quality of a company’s customer experience is inextricably linked to the quality of its employee experience. Over the long term, you can’t deliver a great customer experience unless you have employees who are engaged, inspired and equipped to do so. For many people, this concept makes intuitive sense. After all, if you’re a customer, a good part of the experience you have with a business will be shaped by the staff with whom you interact. If employees are happy and engaged in their jobs, that sentiment will inevitably bleed into their interactions with customers. The staff will be more positive, more solicitous, more helpful—and customers will notice the difference. What’s often overlooked, however, is that the relationship between employee engagement and customer experience is bidirectional. Yes, engaged employees tend to deliver a better customer experience. But a better customer experience also tends to create more engaged employees. Here’s why. Imagine working in the call center of a business that has a horrible customer experience. Nearly every call you take is a complaint—a customer who’s frustrated, annoyed and lashing out because the company has failed to deliver on its promises. Every time that phone on your desk rings, you look at it with trepidation, knowing that, when you pick it up, you’ll likely be the target of another dissatisfied customer’s ire. See also: New Customer Decision Models   Do you think you’d like that job? Would it engage you, make you happy, propel you out of bed in the morning? Probably not. No matter how many cool perks might come with the assignment, there’s no getting around the day-to-day agony of having to repeatedly deal with angry, unhappy customers. It literally saps the engagement and energy from even the best-intentioned employees. Now imagine the other end of the spectrum, working for a company whose customers are consistently satisfied—if not impressed—with the products and services they receive from your firm. Sure, even an organization like that will have its share of customer experience failures that employees need to address. But those would be exceptions rather than the norm, making for a much healthier work environment. Instead of cringing every time the phone rings or a customer approaches, employees would be able to adopt a more positive and constructive stance. Instead of shrinking from customer interactions, they would lean into them with enthusiasm. Instead of focusing on defense, they would focus on delight. Executives often don’t fully grasp how toxic a poor customer experience can be to their employees (let alone their customers). Keep in mind, it’s usually not the employees who are principally at fault for a poor customer experience. Their best efforts are constrained by the systems, processes and workplace infrastructure in which they operate. Consider, for example, how much better a call center representative’s job is when the longest call waiting rarely exceeds a couple minutes. Or how much better a claim adjuster’s job is when policyholders aren’t surprised by “small print” coverage terms. Or how much better an agents' job are when they don’t have to spend hours helping customers decipher unintelligible premium and policy notices. These are just a few examples of common customer experience friction points whose negative influence can be felt not just among customers but employees, as well. It’s important to understand the bidirectional relationship between customer experience and employee engagement because it truly amplifies the value of customer experience excellence to any organization. The impact of experience enhancements, and the return on such investments, must be considered in a more holistic context. See also: Much Higher Bar for Customer Service   Yes, a better customer experience helps raise policyholder retention, increase cross-purchase rates and boost revenues, among other benefits. But it also improves employee engagement, which triggers a whole host of additional benefits, such as reduced staff turnover, lower absenteeism and higher productivity, just to name a few. It’s for this reason that the economic calculus around a great customer experience is far more compelling than many organizations recognize. Happy, engaged employees help create happy, loyal customers who, in turn, help create happy, engaged employees. The value of this virtuous cycle cannot be overstated, and it’s why the most successful companies appreciate—and act on—both sides of the equation. The original article was published here.

Artificial intelligence stands out as one of the hottest technologies in the insurance industry in 2018. We are seeing more insurers identifying use cases, partnering and investing in AI. 85% of insurers are investing time, money and effort into exploring the AI family of technologies. The focus is not so much on the technology itself as on the business challenges AI is addressing.

• For companies looking to improve internal efficiency, AI can assist through machine learning.
• For those working to create a dynamic and collaborative customer experience, AI can assist with natural language processing and chatbots.
• For those seeking an edge in data and analytics, AI can help to gain insights from images with the help of machine learning.

Through our annual SMA Innovation in Action Awards program, we hear many success stories from insurers throughout the industry that are innovating for advantage. AI was a key technology among this year’s submissions. The near-ubiquity of AI was even more obvious among this year’s insurer and solution provider winners, many of whom are leveraging some type of AI to solve widely variant business problems. They have provided some excellent use cases of how insurers are applying AI and how it is helping them to succeed. Two AI technologies, machine learning and natural language processing, fuel Hi Marley’s intelligent conversational platform, which West Bend Mutual Insurance piloted in claims with outstanding results. The Marley chatbot lets West Bend’s customers text back and forth to receive updates, ask and answer questions and submit photos. Its use of SMS messaging means that communication can be asynchronous and done on a customer’s own schedule, eliminating endless rounds of phone tag.

• Natural language processing allows Marley to communicate with customers in plain English – both to understand their needs and to respond in a way that they will understand.
• Machine learning enables Marley to continue to improve. The platform analyzes every conversation and uses it to shape how Marley responds to specific requests, refining its insurance-specific expertise for future interactions.

See also: Strategist’s Guide to Artificial Intelligence   Natural language processing is also a critical tool for Cake Insure, a digital workers’ comp MGA with a focus on making the quoting experience easier for direct customers. One of the hurdles that would-be customers had to overcome in obtaining workers’ comp coverage was answering a multitude of questions regarding very specific information that a layperson is unlikely to know about or understand.

• NAIC codes, for example, are required for every workers’ comp policy, but the average small business owner would be baffled if asked about them. Cake circumvents this by asking usera to type in descriptions of their companies in their own words. Natural language processing parses this plain-language description and searches for its approximate match in the NAIC data sets. This back-end process occurs without the user’s awareness and without exposing potentially confusing content.
• As with Hi Marley’s chatbot functionality, natural language processing is paired with machine learning to improve its ability to respond to specific phrases and content.

Machine learning can also be deployed in conjunction with other AI technologies. Image analysis and computer vision are combined with machine learning in Cape Analytics’ solution, which can automatically identify properties seen in geospatial imagery and extract property attributes relevant to insurers. The result is a continually updated database of property attributes like roof condition and geometry, building footprint and nearby hazards.

• Computer vision helps turn the unstructured data in photos and videos from drones, satellite and aerial imagery into structured data.
• Machine learning allows the solution to train itself on how to do that more effectively, as well as higher-level analysis like developing a risk condition score for roofs.

We are only scratching the surface of how AI can be applied across the value chain. The incredible variety of AI’s potential applications in insurance is difficult to overstate. QBE knows that well: It won a company-wide SMA Innovation in Action Award for wide-ranging activities in emerging technologies and partnerships with insurtech startups, but AI in general, and machine learning specifically, are their top priorities. In addition to partnering with dozens of insurtechs, QBE has also pushed itself to deploy each insurtech’s technology somewhere within its business – meaning QBE has dozens of different creative AI applications in play at once. For example, in partnership with HyperScience, QBE is improving data capture from paper documents through machine learning and computer vision. These winners’ stories demonstrate the myriad ways that insurers are applying AI to improve business operations. Notably, its deployment helps them to significantly improve the customer experience – or, in the case of data capture, the internal employee experience. The need for this kind of seamless customer experience in the digital world cannot be overemphasized. AI, which struck many as a science-fictional concept, has proven its real-world worth by enabling insurers to transform their customer journeys and experience. With full-scale implementations popping up across the insurance industry, as well as the pilots and limited rollouts that we have seen in previous years, it is easy to lose sight of the fact that we are seeing only the very tip of the iceberg in terms of how AI can transform the business of insurance. Applications of more advanced and advancing AI technologies, as well as the combination of AI with emerging technologies such as drones, new user interaction technologies, autonomous vehicles and IoT, are unexplored territory that is bright with promise. See also: 3 Steps to Demystify Artificial Intelligence   This much is clear: AI will change the face of the insurance industry. In fact, it’s already happening. For more information on the SMA Innovation in Action Awards program and this year’s winners, please click here. To download a free copy of SMA’s white paper AI in P&C Insurance: Pragmatic Approaches for Today, Promise for Tomorrow, please click here.

For anyone involved in vehicular transportation, it’s accepted that distracted driving is a deadly problem that needs continued attention. Earlier this year, the National Highway Traffic Safety Administration (NHTSA) published a detailed research report on Distracted Driving in 2016. According to the NHTSA’s statistics:

• Nine percent of fatal crashes in 2016 were reported as distraction-affected crashes
• In 2016, there were 3,450 people killed in motor vehicle crashes involving distracted drivers.
• Six percent of all drivers involved in fatal crashes were reported as distracted at the time of the crash.
• Nine percent of drivers 15 to 19 years old involved in fatal crashes were reported as distracted. This age group has the largest proportion of drivers who were distracted at the time of the fatal crashes.
• In 2016, there were 562 nonoccupants (pedestrians, bicyclists, and others) killed in distraction-affected crashes

Notice that teen drivers are the largest proportion of drivers who were distracted at the time of fatal crashes. However, a recent Arity survey shows that millennials are significantly less likely than the general population to say that “I never multi-task while driving” (48% vs 57%). What does this say about that demographic? With National Teen Driver Safety Week approaching at the end this month, it’s important to fuel this age range with the danger that distracted driving imposes on them. Here at Arity, we used our own data to compare the rate of smartphone penetration in the US, with distracted driving activity of telematics users and industry losses. Our research goes a step further to demonstrate that this problem is only getting worse. The percentage of losses attributed to distraction over the last several years has tripled, costing the industry an estimated $9 billion annually. See also: Distracted Driving — an Infographic   The insurance industry has taken a multi-pronged approach to reduce distracted driving. In addition to high-profile campaigns designed to raise general awareness of distracted driving, such as AT&T’s #ItCanWait initiative, distracted driving solutions have been developed by insurance providers, OEMs and shared mobility and telecommunications companies. As these solutions get closer to reality, there are a few core elements to consider. Here is a five-step process for the creation of a superior recipe for distracted driving detection:

1. Mobile Phone, No Substitutes: While embedded systems and OBD devices are the gold standard for assessing vehicular motion and risky driving patterns, today there is no substitute for the mobile phone in distracted driving detection. The mobile phone is the leading culprit fueling higher rates of distracted driving accidents. Pinpointing mobile phone movement and interaction is the most robust way to identify and prevent these risks.
2. One Part Movement, One Part Interaction: Phone movement only reveals part of the story. Distracted driving algorithms that rely solely on sensor information―accelerometer for translational motion, gyroscope for rotational motion, gravitometer for orientation, etc.―will be subject to false positives and false negatives. For instance, a motorcyclist with a phone safely in his pocket could be unfairly penalized each time he puts his foot down at a stop for balance.
3. Measure Each Ingredient Carefully: Not all forms of distracted driving are equally risky. Checking navigation while stopped at a traffic light is generally less risky than taking a selfie while speeding down the beltline during rush hour. To effectively assess relative risks, there are two fundamental considerations: context and mode. Context means, what were the conditions present at the time of the distracted driving behavior? At what speed was the car being driven; what was the weather like; was there traffic? Mode means, what distracted driving behaviors were taking place? Phone call; texting; navigation; gameplay; etc.
4. Monitor Continuously: Discrete or instantaneous markers only tell part of the story. For instance, counting only moments of large phone movement omits important information about the behaviors that took place interstitially. We can conceptualize distracted driving in terms of continuous sessions and endeavor to identify the starts and ends of these sessions. The total duration of distracted driving will provide the most predictive metrics for risk.
5. Modeling Bakeoff: Distracted driving models can be founded on logic and intuition, but they should be developed and validated with a data-driven approach. For the best solution to emerge, many alternatives should be assessed relative to their performance on labeled data sets―data sets composed of both telematics data as well as reliable labels for the periods of distracted driving. An example of this blended approach would be the Arity and Allstate research that estimated the cost of distracted driving for the insurance industry at $9 billion. This insight was derived from data sourced from national smart phone usage, vehicle telematics and incident claims data.

See also: Distracted Driving: a Job for Insurtech?   At Arity, our mission is to make transportation smarter, safer and more useful for everyone, and understanding and eliminating distracted driving is central to why the company was founded. What’s important is that we don’t see this solely as a technical problem. Aside from understanding the true behaviors that are causing insurance loss, we must also provide a meaningful experience to the driver to eliminate the behavior. It’s important that we don’t stop learning and experimenting; there’s so much more we can do to #enddistracteddriving.

At the InsureTech Connect conference, I witnessed several win-win-win scenarios. For example, one of my friends is doing some fantastic work with data models for the auto industry. One of my other friends is doing amazing work on providing back-end infrastructure (secure chain) for carriers and insurtech startups. All I did was make the introduction, and I witnessed something cool – true collaboration, as other introductions have occurred and produced a possible contract for one of my friends. In my startup journey, I’ve learned we are stronger together and that, the more wins we have, the better for all of us. Even if we are in different industries or verticals in the same industry, the more we collaborate and share, the better for everyone. Startups are interesting, and mentors and experts come in all shapes and experience – folks with deep knowledge/industry expertise and folks who have recent experience in the area they are wanting to disrupt. I’ve seen entrepreneurs chase mentors who have lots of experience. That is awesome! Don’t forget to build relationships with your peers and other startups. The recency of experience for startups is just as important. See also: Future of Insurance Looks Very Different   Let’s look at a couple of examples of creating win-win-win scenarios: Fundraising: Someone who has raised capital for their company 10 years ago is different than someone who is doing that now. Why? Strategies could have changed; players could have changed; and tactics could have changed. For startups wanting to raise capital, talk to your peers who recently raised money. You will get a lot of knowledge vs. a traditional spiel on how to raise money from someone who did it years ago. Collaborate and share! If there is a carrier VC group that may help your colleague, introduce them. If there is an accelerator or competition, share with your network. For insurtechs, insurance is HUGE! I keep joking within our founding team of Benekiva that I have a backlog of problems I want to solve. The only way to win is to collaborate and create win-win-win scenarios not just for you but also for your peers, even if you don’t see a win directly for you. Prospecting: Prospecting during startup stage takes a different lifecycle than for a traditional mature organization. If you come from sales, don’t get hung up on the “sales process and roles.” Be nimble. Involve your team – diversity and team matter. We've seen at Benekiva that, if we stick to traditional sales roles, the passion of the founding team doesn't come through. At ITC, I heard someone make a comment: “The best thing to do with knowledge is to share – not to hoard.” I encourage all my startup colleagues to continue collaborating and train your sixth sense on finding the right collaborative partners. Not everyone talks to you in the spirit of collaboration, but even when you get burned you get great experience and can build a great support system to vet opportunities. See also: Innovation: ‘Where Do We Start?’   Indra Nooyi, whom I've admired and who was the ultimate boss when I was fortunate enough to be working at Pepsico, said during a graduation address at Wake Forest University that it's crucial to help others rise. “Greatness comes not from a position," she said, "but from helping build the future.” Cheers to creating win-win-win scenarios!