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Another Reason for Insurers to Embrace AI

Did you know that artificial intelligence (AI) technology first sounded the alarm on COVID-19?

An algorithm developed by BlueDot, a Canadian AI firm, scoured news reports and airline ticketing data to detect the outbreak on Dec. 31, 2019 in China. On the same day, HealthMap, a Boston Children’s Hospital website using AI, spotted a news report of a new type of pneumonia in Wuhan, China, and alerted global health officials. HealthMap was also the first to notify Chinese health officials that COVID-19 was expanding outside of China.

Over the past decade, U.S. tech firms have made significant advancements in AI, and smart robots are making it far easier to automate tasks and functions across industries. AI’s ability to efficiently analyze large, diverse and unstructured data sets is now proving beneficial in the fight against COVID-19.

We examined the myriad ways AI can benefit P&C insurers in a three-part blog series that ran through February. Now we’re picking up where we left off, but with a focus on a timely and important application for workers’ compensation carriers and other P&C carriers. (A more comprehensive article will be published later in the summer.)

AI in the Fight Against COVID-19

AI is improving the speed and manner in which the world identifies, contains and combats infectious disease outbreaks. Its unparalleled ability to rapidly analyze massive amounts of unstructured data has already proven to be an early detection and warning tool for seasonal influenza.

The CDC, recognizing the potential value of AI, holds an annual competition for AI firms and academic institutions. The participants develop AI algorithms to help identify and predict the severity of future influenza outbreaks. Many of these participants are now leveraging their technology and data sets to fight COVID-19.

See also: And the Winner Is…Artificial Intelligence!

AI alerts have played and continue to play a critical role in detecting and controlling future outbreaks.

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In the wake of the global pandemic, AI technologies are offering hope and promise in the fight against COVID-19. MIT’s Watson AI Lab is funding a research project for early detection of sepsis, a deadly complication of COVID-19 affecting at least 10% of COVID-19 patients. The project aims to develop a machine learning system to analyze white blood cells for signs of an activated immune response against sepsis. MIT is also developing an AI tool to help doctors find optimum ventilator settings for COVID-19 patients. Shorter ventilator treatments will limit lung damage and free ventilators for other patients.

U.S. research hospitals are developing AI solutions to improve the speed and accuracy of their COVID-19 diagnoses. Mount Sinai, a leading New York research hospital, was the first in the U.S. to develop an AI solution that could quickly and accurately analyze chest scans of patients and detect early signs of COVID-19 on par with highly trained and experienced radiologists.

The world’s leading tech firms and academic institutions are partnering with governments and hospitals to limit the spread of COVID-19 and to protect healthcare workers. Boston Dynamics and MIT developed Spot, a smart robot, to deliver medicine and monitor vital signals of COVID-19 patients. With the help of its leading tech firms, China created a smart field hospital in Wuhan to relieve and protect overtaxed medical professionals.

AI technology is also accelerating vaccine development in such efforts as the collaborative work between Harvard and the Human Vaccines Project. Given the lengthy time to create, test and approve a COVID-19 vaccine, academic institutions and AI firms are working with scientists to identify FDA-approved drugs for repositioning to treat or contain COVID-19. BeneloventAI, a U.K. tech startup, has already applied its drug discovery platform for this purpose and identified a drug for a COVID-19 clinical trial.

Why It Matters to P/C Insurers

Many AI advances are aimed at protecting the health and safety of medical professionals – doctors, nurses, EMTs and all those employed in hospitals. That protection extends to patients and visitors who do not have COVID-19. As a result, hospitals and healthcare facilities that quickly embrace and implement these new AI technologies should prove to be more attractive risks for workers’ compensation and professional lines specialty carriers.

The adoption of AI and smart robots in healthcare is especially critical given the advent of workers’ compensation COVID-19 presumption statutes and executive orders designed to protect healthcare workers and others on the front lines of the COVID-19 pandemic. Specifically, those legal efforts shift the burden of proof from the employee to the employer and reduce or eliminate the evidentiary requirements to establish a claim. While these developments are well-intended, many workers’ compensation carriers expect to see a rise in claims in states taking this action. If AI can significantly improve the safety of medical professionals, we hope it can offset the rise in claims from the new COVID-19 presumption laws.

See also: 3 Steps to Demystify Artificial Intelligence

To the extent that AI can help reduce illness or its spread, the need for extensive quarantine measures will be reduced, and all sectors of the economy will benefit. Main Street businesses and manufacturing facilities will be able to operate more safely, and that can mean fewer business interruption and premises liability claims during future infectious disease outbreaks.

Insurers do not need a global pandemic to appreciate the economic and health value of AI. Smart robots, AI and automation will continue to significantly improve workplace safety and employee health for all types of businesses even after we have tackled COVID-19. Gen Re continues to monitor these trends and looks forward to helping you understand and navigate the AI landscape.

You can find this article originally published here.

Stop Being Scared of Artificial Intelligence

In a world where messaging tends to overcomplicate things, too many acronyms and too many buzzwords all work against what should be the primary objective: clearly illustrating value. I’ve found this to be true when it comes to artificial intelligence or, AI.

Generally speaking, the word “artificial” doesn’t call to mind a positive image, does it? Listed meanings include “insincere or affected” and “made by humans as opposed to happening naturally.” 

Artificial intelligence is, in fact, created by humans. The term was coined by John McCarthy, Stanford computer and cognitive scientist, way back in 1955.

AI is not intended to simply be a digital worker, certainly not within financial services and fighting financial crime. Yes, AI can automate various functions. We’re all familiar with the concept of “bots” and virtual assistants. However, those are rudimentary examples of robotic process automation. True AI is human-led and a continuous, instantaneous learning process that drives tangible value. AI is not merely a play to cut costs or replace human capital. Rather, AI enhances the bottom line by keeping compliance staff costs flat in the immediate term and enables our human experts to more appropriately manage their time, by focusing talent on investigations that matter the most.

One of the most valuable aspects of AI, in the context of anti-money laundering and compliance, is the speed by which it can be deployed. We’re talking about time to market and time to value in a matter of weeks. Not months, not multiple quarters — simply weeks. But I don’t mean a generic, black box concept. I’m referring to a highly precise, tailored AI solution that has extensive proof points and, more importantly, far-reaching global regulatory approval.

AI shouldn’t simply be an extension of legacy rules-based routines, nor a way to further automate the process of scoring or risk-weighted alert suppression. That simply dilutes the true value of AI and does not maximize the cost and efficiency benefits.

See also: 3 Steps to Demystify Artificial Intelligence  

The cost of compliance continues to grow at a staggering pace, particularly for financial institutions and insurance companies. Equally of concern, the impact of fines for non-compliance has also skyrocketed in the last decade, to the tune of $8.4 billion last year across North America alone.

What if you could literally solve every single name screen, sanction and transaction alert? What if you could achieve this without sacrificing any aspect of control and security? What if you could increase the throughput, efficiency and accuracy of your compliance operations without adding a single dollar of staff expense to your budget?

Artificial intelligence isn’t scary. It isn’t a black box. And it isn’t the futuristic world of tomorrow. It is the here and now, and it’s battle-tested.

4 Ways AI Helps Insurers Thrive

Artificial intelligence (AI) is one of the most transformative technologies of our time. According to Statista, the global AI software market is expected to grow approximately 154% year-on-year, reaching a forecast size of  $22.6 billion by 2025. As AI grows to permeate seemingly every industry, there’s an opportunity for the insurance industry to leverage AI in day-to-day business operations and to improve the overall customer experience. 

For starters, insurance is a data-driven industry. Advanced technology like AI allows insurance companies to maximize the value they derive from that data. With the right technology, insurance companies can change the traditional siloed mindset to one that engages employees, encourages innovation and promotes collaboration both internally and externally. Insurance companies can thrive in four key areas of their business operations. 

Improve recruitment and retention

Organizations can use AI in recruiting efforts to maximize retention and speed up the process. In fact, according to a recent study, 96% of senior HR professionals believe AI has the potential to greatly enhance talent acquisition and retention. Additionally, it takes an average of 13 hours per week for recruiters to sift through applications to find the right match. Using AI, hiring teams at insurance companies can use data to better match skills with job descriptions to recruit the most qualified candidates. 

Enhance the customer experience

As more insurance companies begin implementing AI, they see the underlying effect it has on their customers’ experience. With the integration of AI comes opportunities for teams to use data to improve the customer experience. 

For example, insurance companies may receive hundreds, if not thousands, of calls per day from customers with questions on filing claims or finding the best quote. Companies can eliminate the need to wait on hold for the next available agent by using AI-powered chatbots and virtual assistants to answer common customer service questions. Additionally, the benefits trickle down to employees, because it’s nearly impossible to be “on” all the time answering customer inquiries around the clock. Companies can lean on AI for common issues, leaving human resources to address more pressing requests or those that require a “softer” touch. This allows customers to feel heard anywhere in the world, all day, every day. 

See also: A Quarantine Dispatch on the Insurtech Trio  

Save time on claims processing and underwriting services

AI can also help insurance companies speed up and streamline their claims processing and underwriting services. On average, an insurance company needs about one to two days to receive and process a claim. Nowadays, most insurance companies have created an app for their customers to use in case they get into an accident. A driver can upload an image of the damage and talk to a representative with the click of a button. AI can expedite the claims process and spot inconsistencies –– which provides teams and customers with peace of mind.

Use data to discover underlying commonalities

AI also enables insurance companies to quickly pull up a customer’s information when the person calls. AI collects and stores data about the customer and allows insurers to better understand why the customer is calling based on previously gathered data or reoccurring requests.

Additionally, insurers can use AI to uncover any underlying customer patterns. A sales team can then better predict customer spending and adjust pricing and product recommendations in a timely manner.

AI is poised to disrupt the industry like never before for both insurers and their customers. AI helps the insurance industry put massive amounts of data to optimal use, which in turn can improve the bottom line and transform business processes. It’s only a matter of time before insurance companies rely solely on AI to give them a competitive advantage in today’s marketplace while setting them up for long-term success.

4 Key Changes to WC From COVID-19

COVID-19 and the onset of a deep global recession are reshaping every corner of workers’ compensation, from legal issues surrounding coverage to the delivery of care to injured workers. Some of the changes can be anticipated based on prior recessions. But others are new and highly dynamic and will vary based on the course of the pandemic.

Amid the flux, we see four changes that are critical for carriers to grapple with. How companies respond to these changes may determine their survival in an extremely challenging economic environment. Fitch is expecting a five-year high default rate this month, and economists are expecting even more bankruptcies in the current downturn than in the Great Recession in 2008-2009. Even well-capitalized companies need to quickly adapt.

A Shift in the Types of Claims Filed

Carriers are seeing a sudden shift in the flow of new workers’ comp claims. On the one hand, aggregate claim volume has dropped 40% or more. This is primarily due to the slowdown in activity and hours worked in industries that traditionally drive a high number of claims, especially retail and hospitality. In addition, roads now have 80% less traffic, so there are far fewer accidents and claims from drivers on the job.

At the same time, new types of claims are emerging. Most specifically, COVID-19 claims are rising sharply. As many as 1,500 had been filed in California alone by late April, according to the California Department of Industrial Relations. The share of new COVID-19 related claims flowing into CLARA Analytics’ cross-industry data lake jumped from 1% in March to 4% in April.

The large majority of these claims are from healthcare workers who interact with patients and first responders such as EMTs and firefighters. Many of these cases are likely to be covered under workers’ compensation, pending an array of actions at the state level to cover these workers, such as Kentucky’s state order on April 9.

We should also expect to see a rise in claims from employees who have been recently furloughed. This is driven in part by situations where an employee has an injury that he or she might not normally have filed a claim for in a healthy economy but decides to file the claim given a declining bank account. Experience from prior recessions indicates these situations skew toward cumulative trauma claims, which are complex and costly to manage.

Changes in Healthcare Delivery

Social distancing and crowded hospitals are also leading to treatment delays for non-critical cases, including both recent and long-standing worker injuries. This will create extended periods of disability, more expensive claims and potential litigation. The impact of these delays will depend on the duration of the pandemic. If the impact on hospitals extends deep into the summer or there is a resurgence of the virus in the fall, there could be a new wave of issues for claimants, employers and carriers.

See also: COVID-19’s Impact on Workers’ Comp  

One benefit: The delays are pushing claimants to seek care in new ways, including telemedicine. Services like Righttime and One Call have seen a 2,000% increase in the use of telemedicine in just the past few weeks. Quicker, easier access to physicians may drive better outcomes and enable incapacitated workers to get care they might not otherwise get, which could lead to lower health-related costs.

More Fraud

Experts predict a rise in fraud in the coming months, as COVID-19 opens up opportunities for new scams by the segment of attorneys and providers known to engage in workers’ comp fraud. We will likely also see more claims that are challenging to define as legitimate or fraudulent because they occurred in a distributed work environment where there are no witnesses to corroborate the injury. Even the definition of a workplace injury is strained in a work-from-home situation.

In response, investigation teams are investing in expanding their online detection practices. AI-based data analysis and predictions can open up insights. “Advancements in AI now enable claims teams to see through hidden provider links, complex supply chains and long lag times to identify fraud that previously went unnoticed,” said Dr. Gregory Johnson, a medical cost consultant and former director of medical analytics at the California Workers’ Compensation Insurance Rating Bureau.

A Rise in Litigation

A set of states have recently issued executive orders and directives that shape COVID-19-related workers’ comp coverage, and some states, like California, are on the verge of doing so. As we’ve seen in the past, new legislation drives legal activity, so we can expect to see an increase in COVID-19 litigation over the next few months.

Litigation may also rise from the increase in terminations. An abrupt layoff can leave employees feeling aggrieved. In other cases, workers may simply be anxious to cover an income gap or are uncertain whether to file a workers’ comp or unemployment insurance claim. Unreported or latent injuries can come to the fore and result in a sharp rise in workers’ comp claims.

“Companies that initiate layoffs with little forethought and guidance may see a rise in workers’ compensation claims and experience numerous other unintended consequences,” said Kevin Combes, Aon’s director of U.S. casualty claims, Global Risk Consulting. In the last recession, Aon saw post-termination claims surge at companies that did not manage the event. “Companies that develop thoughtful reduction-in-force strategies are likely to see fewer workers’ comp claims and lower overall expenses,” Combes said.

A Reason for Optimism

Some of the changes we’re seeing, while disruptive, could have major long-term benefits. New healthcare treatments and delivery channels may emerge that improve outcomes and lower costs. Both private and public players in the workers’ comp system are adopting virtual case reviews, settlement discussions and other practices that might also increase efficiency and system access.

In addition, factors that drive cost in the industry may be seeing positive short-term shifts. For example, many claimants and attorneys may be focused on near-term cashflow and are less intent on maximizing claim values by stretching out litigation. As a result, many of CLARA’s customers are seeing cases move to settlement more quickly, at or below reserve estimates. This may be a prime opportunity to resolve stubborn cases or resolve new ones quickly.

Short-Term Disruption, Long-Term Progress

Claims operations at carriers and third-party administrators are not standing still. They are taking steps to respond and prepare for the future. The most aggressive are preparing teams to handle the shift in claims, including new training and handling procedures and updated case reserve guidelines. Many are evaluating new tools and programs to optimize organizational productivity in anticipation of eventual recovery. Principal among the tools available to manage this new world are the AI applications that have recently come to market.

See also: Impact of COVID-19 on Workers’ Comp  

It’s an ideal time to be evaluating AI, which can dynamically update models to account for changes in claims types and trends. By applying AI, claims teams can identify providers to bring into their networks and evaluate and optimize the performance of their attorney panels with evidence from prior outcomes. AI also can aid in making smarter decisions about when to settle a claim and when to litigate.

By investing now in talent and technology, claims teams set themselves up for success when we move into recovery.

To provide a deeper exploration of these trends and best practices, CLARA Analytics has published a whitepaper, “A Perfect Storm: Six Steps Top Claims Teams Are Taking to Navigate COVID-19 Turbulence in the Workers’ Compensation Market.”

As first published in Claims Journal.

3 Ways to Bar Fraud in Roadside Assistance

Unemployment is rising due to COVID-19, and some of the top risk management firms in the industry have indicated that fraud will also quickly increase. While claims fraud, inflated repair invoices and other common scams are probably the first that come to mind, roadside assistance fraud is another issue to which insurers should pay attention. It’s more common that one might think.

Especially as insurers increasingly offer ecosystem services such as roadside assistance to strengthen customer loyalty and generate additional revenue, it’s important that they ensure their roadside assistance partners are taking measures to protect against fraud, which can range from customers abusing the aid to get free gas, to tow operators sending fraudulent invoices. 

Here are some of the ways to protect against roadside assistance fraud:

Fast Payments Promote Trust

The adage, “An ounce of prevention is worth a pound of cure,” holds true in roadside assistance fraud. Instituting policies that reduce the incentive to commit fraud is far less painful than attempting to recover a loss, and one of these measures is to pay tow operators quickly. Especially in difficult times, those who issue payment within minutes instead of the standard Net-30 will foster loyalty that cuts down on fraud, especially while many companies are struggling to keep operations running. 

Tow operators balk at complex billing that deducts difficult-to-understand fees from their payment. The fees create unpleasant surprises that can make the difference between a profit and a loss. So, make sure that roadside assistance partners offer clear and transparent billing.

Transparency in Invoicing

With fraud on the rise, be on the lookout for roadside vendors that will attempt to bill you for “ghost” services. One way to mitigate this type of fraud is by asking your roadside vendor to provide transparency into completed services, ideally in real time. Require your roadside vendor to provide an unfiltered view into jobs, as well as customer confirmation that the job was completed. This kind of transparency makes it far less likely that you’ll be inaccurately billed or overcharged. Plus, this level of transparency gives you a better view into the customer experience. 

See also: 3 Ways AI, Telematics Revolutionize Claims  

Transparency in Operations

History tells us that, during times of high unemployment, we are likely to see more bad actors entering gig economy jobs. But fraud is often easily caught at the background check level, which can prevent bad actors from getting into the system in the first place. While it’s easy to provide a false name, it’s more difficult to provide a false Social Security number and matching drivers license. So, it’s important to have transparency in how tow operators are onboarded into your roadside assistance partner’s network and the methods they use to verify the identity of each driver and the person’s background. Ask about the types of checks they’re using to ensure identity verification, proper licensure and insurance compliance. Ideally, you want visibility all the way down to the driver level of who is servicing policyholders.

You need transparency because, while background checks have been an industry standard for years in roadside assistance, they may not be conducted at the appropriate level. For example, it’s common to accept a prior, third-party background check for a new contractor, a practice that leaves critical gaps in a contractor’s history and doesn’t necessarily report on charges or information relevant to the position. A “clear background check” usually does not tell you that the driver’s license is suspended, for instance. 

Background checks should be run annually at a minimum, but there are now next-generation background check services that will run in the background to provide live monitoring of arrest feeds, county reports and other proprietary information sites. This kind of continuous monitoring can flag events that could signal trouble, providing the opportunity to prevent fraud before it occurs.

The Importance of Analytics

Some policy holders may look to their roadside policy to help get what they see as “free fuel” as many times as possible. It’s a common scam, where drivers purposely avoid filling up and, when they run out of fuel, call the roadside assistance service to get some for free. 

This kind of fraud is most effectively detected through technology, specifically artificial intelligence, machine learning and analytics. Data analysis can identify previously overlooked trends to catch these kinds of issues and resolve them quickly. Insurers save money when machines and automation do the work instead of adding to headcount or finding problems only after the damage has been done. 

Even as fraud is anticipated to increase, roadside assistance many times has been overlooked. Don’t settle for passive fraud detection. Demand transparency and encourage the use of technology to mitigate risk, which will both reinforce your reputation and drive your bottom line.