Tag Archives: artificial intelligence

3 Ways AI, Telematics Revolutionize Claims

The automotive claims process has long been strenuous, time-consuming and costly both for insurers and consumers. The moment an incident occurs, a driver is placed in a world of stress. In addition to managing the emotional strain that is a car crash, the driver now has to deal with several different parties to repair the damage. Traditionally, it takes one to three days after filing a claim to initiate contact with an insurance adjuster (it takes even more time if the adjuster needs to inspect the damage).

There is suddenly an unexpected burden consuming time and money and requiring paperwork. But advancements in artificial intelligence and telematics (such as our new Claims Studio) can revolutionize the claims system by validating claims, processing them much faster and placing safety at the forefront for drivers. 

Here are three ways the insurance industry can adapt to improve the claims process: 

Validating Claims

Automotive claims have historically been a manual process, where drivers retell their side of the story following a collision. These details are then shared with insurance companies, adjusters and, at times, even courts, to resolve claims and disputes. This process leaves room for ambiguity and human error, because, as we all know, there are two sides to each story. We also have to take into consideration the shock that results from a car crash – a driver might not remember or realize immediately the need to take photos of the damages or call the insurance company to begin the claims process.

Insurers can help drivers mitigate this complicated and stressful process by implementing advanced technologies, now available, that provide accurate, unbiased crash storylines. These narratives detail key findings such as the severity of a crash, where the vehicle was hit, the driver’s speed (before, during and after a collision), the weather and more. A claims adjuster needs this information to do his or her job. When this information is incomplete or inaccurate, the process takes longer, and costs increase for the driver.

Accelerating the Claims Process

In addition to enabling insurers to settle claims more seamlessly and accurately (preventing potential fraud), these technologies aid in settling claims earlier, paving the way for better customer experiences. For example, our solution automatically populates crash insights and reporting into a web portal or directly into an insurer’s claims management system, providing insurers with many details needed to quickly process a claim. By offering claims adjusters this information within 10 minutes of an accident, insurers are empowering them to help drivers quickly resolve their issues.

Placing Safety at the Forefront

The use of artificial intelligence and telematics has brought significant benefits to insurers and consumers. Several auto insurers are already using mobile telematics to assess risk and promote safer driving behavior, but the benefits don’t start and end there. In fact, one of the most important – and life-saving – aspects of the technology is the ability to detect crashes within moments of their occurring. Technology provides real-time notifications of a vehicle crash to quickly send roadside assistance to drivers when they need it most. By providing critical details like GPS location, time and driver identification, new crash detection solutions enable insurers to save valuable time in emergency situations, offering an added level of peace of mind. 

See also: Untapped Potential of Artificial Intelligence  

In some instances, the new technologies could also save a life. One instance is Discovery Insure, a South Africa-based insurer that uses our Crash Detector to send immediate roadside assistance and paramedics to customers following collisions and life-threatening crashes. One customer, Evelyn Sadler, received immediate attention after a taxi swerved into her vehicle, causing it to go airborne. As the distracted driving epidemic increases, causing 1.25 million people to die in road crashes each year, insurers can offer drivers technologies and solutions that can keep safety at the forefront and prevent many deaths. 

The future of the automotive claims system is already here, with several insurers realizing the impact this technology has on their bottom line. I’m excited to continue to watch this space grow – and hope that additional insurance organizations will quickly follow suit.

The Real Disruption From Robotics, AI

Over the past decade, U.S. tech firms have made significant advancements in artificial intelligence and robotics, making it far easier and more efficient to automate tasks and functions across industries. Artificial intelligence (AI) affects all types of risks and lines of insurance, and the workers’ compensation market has a particularly large stake in the developments.

Although the U.S. has experienced technological change and disruption during prior periods of industrial revolution, the pace and scope of the fourth industrial Revolution positions it to have a far greater impact on the U.S. and global economies. The recent advancements in AI and robotics are some of the most significant computer science advancements of our generation. Google CEO Sundar Pichai has compared the advances to the discovery of electricity and fire, while Bain predicts that the U.S. will invest $8 trillion in automated technologies by 2030.

The U.S. is currently the global leader in developing and investing in AI technologies and robotics; however, our global competitors are rushing to catch up. In 2017, AlphaGo, an artificial intelligence program developed by Google, defeated Ke Jie, the world’s champion Go player. (Go is a popular and complex ancient board game made digital). Since then, global investment dollars in AI continue their upward trend.

See also: Untapped Potential of Artificial Intelligence  

Back in 2015, China’s government launched the “Made in China 2025” campaign to become a market leader in developing these new technologies by 2025. As China and other global leaders invest in smart factories (which are driven by AI and robotics), the rise of these factories will affect not only production worldwide but also potentially eliminate jobs and keep wages down worldwide. This intense focus and investment from our largest global competitors will likely accelerate the pace and scale of change and limit our ability to manage the disruptive effects across many sectors of our economy.

Significantly, the new technologies are poised to challenge traditional assumptions that AI and robotics will be used to perform only low-level and highly repetitive tasks. MIT’s latest research shows that machines are better at pattern recognition and judgment calls. New AI technologies and robotics are also helping doctors detect early signs of cancer by analyzing a condition and comparing it with data points of other patients. (We’ll explore this notion further in our next blog in this series.)

It remains unclear whether the benefits of AI and robotics will outweigh the disruption to many traditional industries and their employees. In fact, a number of influential CEOs, venture capitalists and academics have already raised concerns about how these advances in AI and robotics could fundamentally change our society and the future of work for blue- and white-collar workers.

See also: 3 Steps to Demystify Artificial Intelligence  

Blackstone’s CEO, Stephen Schwarzman, who provided $250 million to launch MIT’s new college for AI and robotics, remarked, “We face fundamental questions about how to ensure that technological advancements benefit all – especially those most vulnerable to the radical changes AI will inevitably bring to the nature of the workforce.”

AI: Overhyped or Underestimated?

Technologies in the artificial intelligence family have great potential in insurance, according to a recent SMA survey of P&C insurance executives. This should come as no surprise to anyone following the developments in machine learning, natural language processing, computer visioning, chatbots, virtual assistants and related technologies. After a long and varied history of AI technologies (including the lengthy AI winter), we are now on the verge of the golden age of AI. At least that’s the storyline most have bought into. But in the context of the insurance industry, is the potential of AI overhyped? Or, despite all the enthusiasm, is the ultimate impact even underestimated?

To answer those questions, it is necessary to examine the technologies and their possible uses. There is not one easy way to express the potential of AI for P&C. And much of the actualization depends on the time frame. It is important to recognize the many different technologies that compose the AI family. Insurers see the highest potential in machine learning, robotic process automation (RPA) and technologies to analyze unstructured data (natural language processing and data mining). RPA implementations, in particular, are taking off like rockets in the industry. Insurers of all sizes are already leveraging the technology to automate routine tasks. Many projects are also underway using machine learning to assess risk and identify fraud (among other things). So, value is already being delivered, and insurers are moving forward with AI-related projects for specific technologies.

Several factors are driving the interest and activity in AI. First, insurance is a process and data-intensive industry. Massive amounts of both structured and unstructured data are captured, routed, organized, and analyzed. The industry has just scratched the surface on the traditional data, and new data sourced from sensors and connected devices is added to that. The possibilities to automate for efficiency and analyze for insight are tremendous. Second, insurance is a people-intensive industry. For most lines, experts are required to sell insurance, assess risk, handle claims and manage operations. Many of the seasoned experts in various disciplines are expected to retire over the next five to 10 years. This creates a compelling need to automate low-level tasks and augment human expertise for more complex tasks so that the potentially smaller and less experienced workforce can continue to propel the industry forward.

See also: What Will AI Change First?  

Yes, there is a lot of hype about how AI will transform the industry. And the potential transformation may still be a few years away as the power of AI technologies slowly ripples across the industry. But the convergence of industry factors, the rapid progress of the technologies and the experience gained by other industries in their AI deployments mean that AI is likely to transform insurance over time. So, it’s safe to assume that the potential of AI technologies is overhyped for the near term but underestimated for the long term.

See SMA’s new research report, AI Technologies in P&C: Insurer Progress, Plans, and Potential, for more details and insights.

Is Insurtech a Game Changer? It Sure Is

Several years ago, property and casualty insurance executives were looking over their shoulders anxiously at a growing number of internet startups. Who were these scruffy people wearing black turtlenecks? Could they really “disintermediate” legacy providers that had been around for a century or more?

Since then, we’ve all evolved. By now, most brands know they have inherent strengths that are hard to dislodge. The startups have matured, too, and they clearly have something to offer the market. We’re now working with companies in both camps, helping them navigate this new normal, where collaboration, acquisition and competition are all plausible options.

Some insurers may think they’ve dodged a bullet. But insurtech’s threat is more stealthy, and no less powerful.

Insurtech: the new, new thing?

At this fall’s InsureTech Connect trade show, literally thousands of people descended on Las Vegas to show and examine the latest offerings, from core systems, predictive analytics tools and anything-as-a-service to pitches addressing distribution, pursuing unserved niche markets, offering comparative pricing and broker services and more.

In our recent report on the state of insurtech, we cautioned insurers to look beyond the many truly interesting offerings now coming to market. As impressive as these tools are, we urged decision makers to stay focused on the capabilities that make their companies unique.

See also: Has a New Insurtech Theme Emerged?  

What do insurers really do?

So, what are those capabilities? At holiday dinner tables, you may find yourself talking to a relative about what insurance is, and why it’s important. You may say something like, “We create products that help manage risk by sharing the possibility of individual loss with a larger pool of users.” This explanation held true for a long time, but,
with the rise of insurtech, it may not be the best way to look at your business.

That’s because many insurtech companies have emerged to manage the firehose of data that now shapes our world: the Internet of Things (IoT), wearable health devices, connected cars, artificial intelligence and more. Of course, there’s still a role for insurers when someone else captures and gets the insight from that data. But it’s a commodity role, driven by who is willing to write a policy to offset the risk at the lowest rate. There won’t be many winners, and the margins won’t be attractive.

Some insurers see their business as settling claims and handing out checks. But when someone else is using telematics to assess driving habits, or social media to understand lifestyle risks, who will be able to monetize this data? Increasingly, underwriting depends on getting deep into the data-driven weeds. If you’re not there, recognize that someone else will be.

The rise of outside money

There’s another factor shaping insurance today: the amount of private equity (PE) and venture capital (VC) money flooding into the industry. An industry as highly capitalized as insurance was bound to have external investors come knocking eventually. Now, they have.

To be blunt, many insurance systems are too costly and too slow. PE and VC firms have seen this, and they’ve said to themselves, “I don’t have to be perfect, and I know I can be more efficient than this. Even if I’m only a little bit better than the legacy players, I can make a very healthy profit.” It’s a form of arbitrage, and competition could soon get a lot tougher.

With the acceleration of insurtech and related technologies such as cloud and artificial intelligence, PE and VC firms have found a way in that doesn’t require them to show a century of stability. They can do very well developing an insurtech play for very specific aspects of the P&C value chain. Many traditional companies are finding themselves in a commoditized business, without the structure of a commodity manufacturer.

Finding your way to play

Some of the most exciting developments in technology are now reshaping the insurance industry. That spells new opportunities and new risks. With the rise of PE and VC funding, we now see competition emerging from companies with significant resources—and they’re privately held so they can be more patient investors.

See also: Advice for Aspiring Leaders in Insurtech  

Legacy insurance companies still have enormous advantages, and many opportunities to win. But most won’t be able to do it alone, and there are many examples of insurers that wasted time (and money) on the wrong insurtech acquisition or partnership. As the cycles of innovation and capital movement accelerate, you’ll need to be more focused than ever on the capabilities that make your company great. Insurtech is a game-changer.  Make sure you’re playing the right game.

3 Big Challenges on the Way to Nirvana

We hear almost daily how insurtech is disrupting the once-staid insurance industry. The main ingredients are big data, artificial intelligence, social media, chatbots, the Internet of Things and wearables. The industry is responding to changing markets, technology, legislation and new insurance regulation.

I believe insurtech is more collaborative than disruptive. There are many ways insurance technology can streamline and improve current processes with digital transformation. Cognitive computing, a technology that is designed to mimic human intelligence, will have an immense impact. The 2016 IBM Institute for Business Value survey revealed that 90% of outperforming insurers say they believe cognitive technologies will have a big effect on their revenue models.

The ability of cognitive technologies, including artificial intelligence, to handle structured and unstructured data in meaningful ways will create entirely new business processes and operations. Already, chatbots like Alegeus’s “Emma,” a virtual assistant that can answer questions about FSAs, HSAs and HRAs, and USAA’s “Nina” are at work helping policyholders. These technologies aim to promote not hamper progress, but strategies for assimilating these new “employees” into operations will be essential to their success.
Managing the flood of data is another major challenge. Using all sorts of data in new, creative ways underlies insurtech. Big data is enormous and growing in bulk every day. Wearables, for instance, are providing health insurers with valuable data. Insurers will need to adopt best practices to use data for quoting individual and group policies, setting premiums, reducing fraud and targeting key markets.

See also: Has a New Insurtech Theme Emerged?  

Innovative ways to use data are already transforming the way carriers are doing business. One example is how blocks of group insurance business are rated. Normally, census data for each employee group must be imported by the insurer to rate and quote, but that’s changing. Now, groups of clients can be blocked together based on shared business factors and then rated and quoted by the experience of the group for more accurate and flexible rating.

Cognitive computing can also make big data manageable. Ensuring IT goals link back to business strategy will help keep projects focused. But simply getting started is probably the most important thing.

With cognitive computing, systems require time to build their capacity to handle scenarios and situations. In essence, systems will have to evolve through learning to a level of intelligence that will support more complex business functions.

Establishing effective data exchange standards also remains a big challenge. Data exchange standards should encompass data aggregation, format and translation and frequency of delivery.
Without standards, chaos can develop, and costs can ratchet up. Although there has been traction in the property and casualty industry with ACORD standards, data-exchange standards for group insurance have not become universal.

See also: Insurtech’s Approach to the Gig Economy  

The future is bright for insurers that place value on innovating with digital technologies and define best practices around their use. It’s no longer a matter of when insurance carriers will begin to use cognitive computing, big data and data standards, but how.