Tag Archives: avatar

My Risk Manager Is an Avatar

In the world of commercial insurance, there exists the very curious role of risk manager. I mean curious in the sense that successful risk managers appear to have superpowers. They are charged with taking the actions necessary to avoid or reduce the consequence of risk across an entire enterprise. Their knowledge must extend deeply into a variety of subjects such as engineering, safety, the subtleties of the business of their employer, insurance (of course), physics, employee motivation and corporate politics and leadership. Their impact can be wide-ranging, from financial (e.g., dollar savings from risk avoidance/mitigation) to personal (the priceless value of the avoidance of employee death or injury).

Sadly, the tyranny of economics restricts the access that businesses have to continuous, high-quality risk management. Full-time risk managers are prevalent in huge, complex, global companies. These firms often self-insure, or purchase loss-sensitive accounts, and the financial value of a risk management position (or department) is clear. The larger mid-market firms can afford to selectively purchase safety consultant services; their insurance broker might perform some of these tasks (especially at renewal), and their insurers may have loss control professionals working some of these accounts. However, for the majority of small businesses, risk management at the professional level is not affordable.

I have toyed with different ideas about how to automate this function to bring the value of a risk manager to the small commercial business segment. My attempts were always unsatisfying. However at a Front End of Innovation conference in Boston, a presentation by Dr. Rafael J. Grossmann (@ZGJR) crystallized the vision. I can now clearly see how existing technology can be combined to create a risk manager avatar.

Dr. Grossmann is a trauma surgeon who practices in Maine. In addition to the normal challenges of his profession, he is one of only four trauma surgeons servicing a very wide area. Although the area is sparsely populated, the challenge of distance and time complicates the delivery of medical services. Dr. Grossmann presented his vision of a medical avatar, a combination of technologies that will perform 80% or more of the routine medical cases in a consistent, timely and cost-effective manner. Combining the technologies of mobile, voice recognition, virtual reality, artificial intelligence, machine learning and augmented reality forms a new silicon entity – a medical doctor avatar. He also introduced a company, sense.ly, that is working to deliver similar services (video here: http://www.sense.ly/index.php/applications/).

If such systems can deliver medical services, then why not risk management? For example, given permission, a system would monitor the purchases of a small company and identify when the historical pattern changes, e.g., when the company begins to buy new types of materials. Using predictive algorithms, the pattern can be compared against others to evaluate if there is likelihood that the company is now performing new business operations. The avatar could then contact the small business, or could signal human intervention by an underwriter to evaluate the necessity for an endorsement to a policy to cover the new business operation. Eventually, some of these interventions would also be handled through machine-to-machine communication and would allow the endorsement to take place automatically.

Someone will build a risk management avatar. The question is, who will do it first?

Location, Location, Location – It Matters in Insurance, Too

Location plays a critical role in the insurance industry. The issue of place is central to business acquisition, channel management, underwriting, and claim adjudication, to name a few insurance business functions. However, most insurers are challenged by how to find, access, and use the requisite geographic information to improve decision-making, operations, and customer service. Fortunately, one potential solution to the challenge is emerging through the use of three groups of technologies – social media, location intelligence, and mobility – which some technology and telecommunication firms are beginning to support and/or package together into one set of interdependent capabilities called SoLoMo. Ovum's recently published report SoLoMo: Social, Location, and Mobility Join to Enhance Insurance Commerce and Service describes what SoLoMo is and discusses SoLoMo's stages of engagement, major capabilities, and revenue opportunities for insurers. One revenue possibility is offering telematics value-add services such as discounts at restaurants to reward good driving behavior.

SoLoMo is a set of capabilities that “knows” about the longitude and latitude of a geographic area and, to some degree, knows in real time about the tangible assets (e.g. buildings, vehicles, livestock) within it, whether those tangible assets have embedded sensors or not. SoLoMo creates and delivers its knowledge in a real-time, geographically defined context. The contextually determined knowledge is created by streams of information captured on a device as a person travels to or moves through a location. That information includes the needs of the person using the device, the device's location, and the location's tangible assets. The information also includes social media and business enterprise social network feeds about the location and its tangible assets. Currently, a SoLoMo device could be a smartphone, tablet, or vehicle with an embedded sensor.

There are four stages of real-time engagement between a SoLoMo device and its surroundings. SoLoMo devices can already support some of the capabilities of the first three stages of engagement:

  • Stage 1 – Passive engagement: This is the basic level of SoLoMo engagement, and it offers a “for your information” purpose about the location of homes or businesses.
  • Stage 2 – Active engagement: This level of engagement includes the commonly available turn-by-turn directional guidance with or without voice navigation. However, it could also include receiving information from other smartphones or tablets in the geographic area.
  • Stage 3 – Interactive engagement: This level of engagement enables insurance stakeholders to receive and incorporate information from sensor-embedded tangible assets in the geographic area concerning their state (e.g. damaged or destroyed).
  • Stage 4 – Autonomous engagement: This level of engagement enables the SoLoMo device to accomplish everything in Stage 3 but without human intervention.

SoLoMo will need to encompass six major capabilities to support insurance company commerce and service requirements as the levels of engagement evolve through the four stages. The objective of each capability is:

  • Determine: This capability enables users of a SoLoMo device to determine if a physical artifact exists in a given location, whether the person using a SoLoMo device is stationary or moving through the geographic area.
  • Share: This capability enables users of a SoLoMo device to share ideas with personal social media or enterprise social network (ESN) members about the state of the physical artifact and its content.
  • Capture: This capability enables users of a SoLoMo device to capture information about the location and its tangible assets (and possibly the contents of each tangible asset).
  • Interact: This capability enables users of a SoLoMo device to interact with a digital avatar representing the tangible asset and its content. The digital avatar would store the date and nature of the interaction as well as the name or other identification of the SoLoMo device (or person using the device) engaging with it.
  • Integrate: This capability enables users of a SoLoMo device to integrate third-party data sources (e.g. NOAA, Marshall & Swift/Boeckh) and information from the insurer's ESN, core administration, and customer relationship management or customer experience management (CRM/CEM) systems together on the device.
  • Personalize: This capability enables the user of a SoLoMo device to receive personalized information based on the insurance stakeholder's needs and the geographic area.

SoLoMo offers insurers an opportunity to provide fee-based value-added services. This is important because it helps insurers diversify their earnings from being primarily risk-based premium revenue. Examples of value-added services that insurers could offer policyholders or prospective clients include the following, which could be augmented with social media feeds or, where appropriate, the insurer's ESN content and real-time commentary:

  • Telematics services – Insurers could offer: (1) discounts at restaurants based on good driving behavior; (2) safe driving programs that provide discounts on automobile insurance premiums to policyholders willing to install a device, or an app on an existing device, that prevents the driver from using a smartphone while the vehicle is in motion; or (3) information about the closest authorized automobile repair shop.
  • Remediation services – Insurers could provide a buying service for requisite items to restore retail customers’ homes or commercial clients’ business facilities, including bundling reviews from other policyholders or the general marketplace about the quality of products and services from companies selling the replacement products.
  • Child or elderly parent safety monitoring – Insurers could offer clients monthly geo-fencing monitoring of children or elderly parents' movements within a target location.
  • Business interruption cost estimation – Assuming the enterprise has a sufficient number of embedded sensors in the facility's structures and content the enterprise sells, insurers could estimate the state of each of the enterprise's tangible assets (existence, destruction, damage), compare that with data sources relating to labor and material cost to replace or remediate the tangible assets, and wirelessly report that information to the enterprise's CFO and chief risk officer (and to the insurer's actuarial and claim departments).