Tag Archives: waze

data symmetry

Competing in an Age of Data Symmetry

For centuries, people have lived in a world where data was largely proprietary, creating asymmetry. Some had it. Others did not. Information was a currency. Some organizations held it, and profited from it. We are now entering an era of tremendous data balance — a period of data symmetry that will rewrite how companies differentiate themselves.

The factors that move the world toward data symmetry are time, markets, investment and disruption.

Consider maps and the data they contained. Not long ago, paper maps, travel books and documentaries offered the very best views of geographic locations. Today, Google allows us to cruise nearly any street in America and get a 360° view of homes, businesses and scenery. Electronic devices guide us along the roadways and calculate our ETA. A long-established map company such as Rand McNally now has to compete with GPS up-and-comers, selling “simple apps” with the same information. They all have access to the same data. When it comes to the symmetry of geographic data, the Earth is once again flat.

Data symmetry is rewriting business rules across industries and markets every day. Insurance is just one industry where it is on the rise. For insurers to overcome the new equality of data access, they will need to understand both how data is becoming symmetrical and how they can re-envision their uniqueness in the market.

It will be helpful to first understand how data is moving from asymmetrical to symmetrical.

Let’s use claims as an example. Until now, the insurer’s best claims data was found in its own stockpile of claims history and demographics. An insurer that was adept at managing this data and applied actuarial science would find itself in a better position to assess risk. Competitively, it could rise to the top of the pack by pricing appropriately and acquiring appropriately.

Today, all of that information is still very relevant. However, in the absence of that information, an insurer could also rely upon a flood of data streams coming from other sources. Risk assessment is no longer confined to historical data, nor is it confined to answers to questions and personal reports. Risk data can be found in areas as simple as cell phone location data — an example of digital exhaust.

Digital exhaust as a source of symmetry

Digital exhaust is the data trail that all of us leave on the digital landscape. Recently, the New York City Housing Authority wished to determine if the “named” renter was the one actually living in a rent-controlled apartment. A search of cell phone tower location records, cross-referenced to a renter’s information, was able to establish the validity of renter occupation. That is just one example of digital exhaust data being used as a verification tool.

Another example can be found in Google’s Waze app. Because I use Waze, Google now holds my complete driving history — a telematics treasure trove of locations, habits, schedules and preferences. The permissions language allows Waze to access my calendars and contacts. With all of this, in conjunction with other Google data sets, Google can create a fairly complete picture of me. This, too, is digital exhaust. As auto insurers are proving each day, cell phone data may be more informative to proper pricing than previous claims history. How long is it until auto insurers begin to look at location risk, such as too much time spent in a bar or frequent driving through high-crime ZIP codes? If ZIP codes matter for where a car is parked each night, why wouldn’t they matter for where it spends the day?

Data aggregators as a source of symmetry

In addition to digital exhaust, data aggregators and scoring are also flattening the market and bringing data symmetry to markets. Mortgage lenders are a good example from outside the industry. Most mortgage lenders pay far more attention to comprehensive credit scores than an individual’s performance within their own lending operation. The outside data matters more than the inside data, because the outside data gives a more complete picture of the risk, compiled from a greater number of sources.

Within insurance, we can find a dozen or more ways that data acquisition, consolidation and scoring is bringing data symmetry to the industry. Quest Diagnostics supplies scored medical histories and pharmaceutical data to life insurers — any of whom wish to pay for it. RMS, AIR Worldwide, EQECAT and others turn meteorological and geographical data into shared risk models for P&C insurers.

That kind of data transformation can happen in nearly any stream of data. Motor vehicle records are scored by several agencies. Health data streams could also be scored for life and health insurers. Combined scores could be automatically evaluated and placed into overall scores. Insurers could simply dial up or dial down their acceptance based on their risk tolerance and pricing. Data doesn’t seem to stay hidden. It has value. It wants to be collected, sold and used.

Consider all the data sources I will soon be able to tap into without asking any questions. (This assumes I have permissions, and barring changes in regulation.)

  • Real-time driving behavior.
  • Travel information.
  • Retail purchases and preferences.
  • Mobile statistics.
  • Exercise or motion metrics.
  • Household or company (internal) data coming from connected devices.
  • Household or company (external) data coming from geographic databases.

These data doors, once opened, will be opened for all. They are opening on personal lines first, but they will open on commercial lines, as well.

Now that we have established that data symmetry is real, and we see how it will place pressure upon insurers, it makes sense to look at how insurers will use data and other devices to differentiate themselves. In Part 2 of this blog, we’ll look at how this shift in data symmetry is forcing insurers to ask new questions. Are there ways they can expand their use of current data? Are there additional data streams that may be untapped? What does the organization have or do that is unique? The goal is for insurers to innovate around areas of differentiation. This will help them rise above the symmetry, embracing data’s availability to re-envision their uniqueness.

What I Learned at Google

As a regulator, I am often told I thwart innovation. To the contrary, I am very open-minded and excited by many of the innovative ideas I see and read about. Recently, I participated in an event at the Google campus with insurance experts from around the globe for a day of collaboration and learning. It was an experience I will not soon forget.

We spent the day discussing Google Compare, Waze and autonomous vehicles. Ideas were freely shared, discussed and challenged. What most impressed me was the great excitement the group showed about insurance evolving with new technologies. Oftentimes, the regulators in the room were asked our opinions on these technologies and the inherent regulatory issues. The regulators did a nice job articulating our need to protect insurance consumers and to adequately supervise carriers to ensure financial soundness and legal compliance, while allowing for innovations that work within our regulatory system.

It was a robust discussion, and I learned a number of key things about Google and its view of innovation and, in particular, insurance innovation.

  • Google works to fix problems. The Google employees were clearly driven to fix problems, and that desire took precedence over job titles. This was refreshing to witness first-hand.
  • Google thinks big picture. With a number of insurance regulators and insurance company executives in the room, it was eye-opening to hear a Google employee discuss statistics or numbers when solving problems only to admit the statistics or numbers were not precise. The Google employee considered best estimates that were “probably close enough” to a true statistic or number to be good enough to keep the ball rolling. Insurance company executives generally would only rely on exact figures to prove a business point, which requires actuaries to pound through data for weeks to get the correct number. Unfortunately, during the lengthy look at the data, innovation likely sits idle.  Google’s ability to not think in a vacuum or silo appears to be critical to moving innovation and ideas forward without being totally entrenched in analysis paralysis.
  • Google focuses on the customer. Repeatedly, Google employees drilled home how they view their relationships with their customers and their desires to constantly improve the lives of those customers.
  • Google wants to work with insurance regulators and policy makers. Google understands, respects and embraces the important role regulators play in protecting consumers. The fact that invited me to participate demonstrates this commitment.
  • Google is incredibly mission-focused. All the people I met from Google discussed the mission they had for their particular projects over everything else. Whether the missions were saving lives, improving buying experiences or lessening traffic and use of fossil fuels, these employees know the mission of the projects they are working on and how they relate back to the overall mission of Google.
  • Google could be a powerful force in the insurance space. Google has smart people who understand customers and the demands of the customers. Combining this with a desire to improve customers’ experiences and the immense technological and mobile resources Google possesses likely makes it a strong source of innovation in insurance.
  • Google employees are powerful brand ambassadors. How employees act says more about an organization than any activities the employer does. Every Google employee I met was a true Google ambassador. From the individual who welcomed us, to the person who showed us around, to the staff in the cafeteria, to the executives. Google’s employees understand Google’s mission and, more importantly, have bought into the vision.

I have spent a lot of time working with innovative ideas and new companies. These experiences assist me in my role as commissioner in fulfilling the mission of the Iowa Insurance Division. As a leading insurance state, we focus on insurance innovation, and I’m excited to invite you to register for the third annual Global Insurance Symposium in Des Moines on April 26-28, 2016.

During this symposium, renowned industry keynote and panel speakers will engage in dialogue on regulatory trends and issues that are affecting the industry, as well as focus on innovations in insurance across the globe.

Don’t miss your chance to participate, ask questions and learn from some of the brightest minds from around the world. Visit www.globalinsurancesymposium.com for more information.

 

 

AI’s Huge Potential for Underwriting

For decades, the insurance industry has led the world in predictive analysis and risk assessment. And today, with the treasure trove of big data available from historical processes, IoT and social media, insurance companies have the opportunity to take this discipline to a whole new level of accuracy, consistency and customer experience.

The actuarial models that were once driven solely by large databases can now be fueled with tremendous quantities of unstructured data from social media, online research and news, weather and traffic reports, real-time securities feeds and other valuable information sources as well as by “tribal knowledge” such as internal reports, policies and regulations, presentations, emails, memos and evaluations. In fact, it is estimated that 90% of global data has been created in the past two years, and 80% of that data is unstructured.

A large portion of this data now comes from the Internet of Things — computers, smart phones and wearables, GPS-enabled devices, transportation telematics, sensors, energy controls and medical devices. Even with the advancement of big data analytics, the integration of all this structured and unstructured data would appear to be a monumental achievement with traditional database management tools. Even if we could somehow blend this data, would we then need thousands of canned reports, or a highly trained data analytics expert in every operating department to make use of it? The answer to this dilemma may be as close as our smartphones.

Apps that Unleash the Power

As consumers, we are no stranger to the union of the structured and unstructured datasets. A commuter, for example, used to rely on Google Maps to get from his office to his home. But with the advent of apps like Waze, not only can he get directions and arrival times based on mileage and speed data, but can also combine this intelligence with feeds from social media and crowd-sourced opinions on traffic. Significant advances in the power of in-memory processing, machine learning, artificial intelligence and natural language processing have the potential to blend millions of data points from operational systems, tribal knowledge and the Internet of Things — using apps no more complicated than Google Maps.

Using apps that harness the power of artificial intelligence and machine learning can provide far superior predictive analysis simply by typing in a question, such as: What are the chances of a terrorist act in Omaha during the month of December? Where is the most likely place a power blackout will occur in August? How many passenger train accidents will occur in the Northeast corridor over the next six months? What will be the effect on my fixed income portfolio if the Federal Reserve raises short term interest rates by .25 percentage point?

Using a gamified interface, these apps can use game theory such as Monte Carlo simulations simply by moving and overlaying graphical objects on your computer screen or tablet. As an example, you could calculate the likely dollar damages to policyholders caused by an impending hurricane simply by moving symbols for wind, rain and time duration over a map image. Here are some typical applications for AI app technology in insurance:

Catastrophe Risk and Damage Analysis

Incorporate historical weather patterns, news, research reports and social media into calculations of risk from potential catastrophes to price coverage or determine prudent levels of reinsurance.

Targeted Risk Analysis (Single view of customers)

With the wealth of individual information available on people and organizations, it is now possible to apply AI and machine learning principles to provide risk profiles targeted down to an individual. For example, a Facebook profile of a mountain climbing enthusiast would indicate a propensity for risk taking that might warrant a different profile than a golfer. Machine learning agents can now parse through LinkedIn profiles, Facebook posts, tweets and blogs to provide the underwriter with a targeted set of metrics to accurately assess the risk index of an individual.

Underwriting

Each individual assessor has his own predilection to assessing risks. By some estimates, insurance companies could lose hundreds of millions of dollars either through inaccurate risk profiling or through lost customers because of overpricing. AI apps provide the mechanics to capture “tribal knowledge,” thereby providing a uniform assessment metric across the entire underwriting process.

Claims Processing

By unifying unstructured data across historical claims, it is possible to establish ground rules (or quantitative metrics) across fuzzy baselines that were previously not possible. Claims notes from customer service representatives that would previously fall through the cracks are now caught, processed and flagged for better claims expediting and improved customer satisfaction. By incorporating personnel records when a major casualty event occurs, such as a severe storm or flood, you can now dispatch the most experienced claims personnel to areas with the highest-value property.

Fraud Control

Integrate social media into the claims review process. For example, it would be very suspect if someone who just put in a workers’ compensation claim for a severe back injury was bragging about his performance at his weekend rugby match on Facebook.

A Powerful Value Proposition

The value proposition of artificial intelligence apps for better insurance industry underwriting and risk management is too big to ignore. Apps have been transformational in the way we intelligently manage our lives, and App Orchid predicts they will be just as transformational in the way insurance companies manage their operations.

The Need for Speed: It Just Keeps Intensifying

At the recent meeting of the Insurance Accounting & Systems Association, President Bill Clinton said in his keynote speech, “Share the future or fight over it.”

As an industry, we have a history of collaborating, which has benefited all of us, but we need to raise the bar to succeed in this fast-changing world. Other industries and businesses are changing all around us and seeking to encroach on and challenge insurance. So we must embrace open innovation, collaboration, crowdsourcing and ideation with new standards and at higher levels within companies, within the industry and even between industries.

The topics of innovation, change, and emerging technologies were the focus of this year’s IASA “Around the Horn” industry analyst panel. I had the pleasure of representing SMA, and as I prepared for the panel session I found myself taking a step back. I realized that when leveraging the vast base of SMA research and insights and blending that with the broader strategic business implications for the industry, a powerful story emerged. A wave of disruption and innovation has hit our industry with an intensity that we didn’t quite expect.

In the spirit of sharing, for those who did not attend, here is a summary of my rapid-fire responses to the panel questions to help inspire you, challenge you and get you to embrace collaboration as an industry to help you quickly define your future:

–Innovation is happening all around us. We are at the forefront of what is probably the greatest disruption in history: the digital revolution. And it is affecting every industry. This revolution is fueled by the breadth and depth of the new technologies that are changing customer engagement, transforming products and services, redefining business and revenue models, breaking down barriers to new entrants and more – look at the Apple iPhone, introduced 7 years ago, and the resulting destruction and construction of industries and businesses. Today, the bar is set at a new high. Operational excellence is an absolute. Innovation is necessary for future success. And the Next-Gen Insurer is being defined and shaped.

–Insurers must have a strong culture that combines the power of open innovation with an ecosystem that empowers collaboration. If we don’t define our own future as an industry, other industries may try to step in and define it for us.

–We must focus on the constantly connected customer. We all must recognize that, in this digital revolution, the customer is in control and is defining the channels that he or she wants to use – from purchasing through service. As insurers seek to become digital insurers, they must have unified digital strategies that create seamless, consistent and connected customer experiences in an omni-channel environment. Think like Google, Zappos, Apple, Nike, AT&T and others that are the new digital leaders.

–Product development and configuration are key differentiation levers. These capabilities are shaping today’s competitive landscape, with speed to market of paramount importance. The pressure to stay current, deliver new offerings and price accurately is driving many insurers to seek innovative solutions. The average new product implementation timeline is nearly 7.5 months. Less than 2% of insurers can implement in less than 30 days. But some innovative companies have found a way to implement in less than 5 days! Another emerging capability of even greater importance is the enabling of product co-creation – customers can help to configure their own products according to their wants and needs.

–Usage based insurance (UBI) is not just about product; it’s a whole new business model. UBI moves the focus from risk assessment to risk prevention. And its application is much larger than auto insurance. It is about the connected car, the connected home and the connected life. UBI is the precursor of a broader impact of sensors and the Internet of Things that will allow us to connect the dots between data for new customer products, services, outcomes and experiences – providing a real-time view of risk.

–Data is the new currency in the digital world. Data has always been seen as the lifeblood of the industry, but its strategic value is now at the forefront. And big data, business intelligence and analytics continue to take the insurance industry by storm. What is holding insurers back is the lack of a data management strategy and a deficient level of data mastery. Both strategy and mastery will be needed to unlock the full business value of data, whether transactional, unstructured, internal or external.

–Social media is a subset of digital data. Customers are sharing information about all aspects of their lives – social, pictures, online discussions, GPS, sensors, mobile technologies and more – and all this data is in the cloud. People are able to search their recorded memories and use new tools that can influence and shape their lives like never before. New companies are creating digital lockers for data that can be stored and managed by customers to be used in innovative ways. When new solutions like these form around customer logging activities, the question from customers will be: “Is the value of what I’m revealing worth the services I’m receiving in return?” The key issue will be the customers’ control of their data.

–Digitalization is happening and is dramatically destructive. A foundational change is taking place in the way all businesses are approaching value creation. In today’s hyper-connected world, companies are moving from managing value chains to managing ecosystems to power their businesses. The ubiquitous connectivity of people via the Internet and emerging technologies is disrupting traditional business assumptions about how to engage customers, the products and services offered and, ultimately, business and revenue models. Just look at these transformations: from the Yellow Pages to Yelp, hailing a cab to Uber or Lyft, booking a hotel to Airbnb and policemen managing traffic to managing traffic with crowdsourcing Waze. All of these represent the disruption happening all around insurance and point to the imminent disruption that will transpire within insurance.

–Mobile is much broader than the phone and tablet. It includes smartphones, MP3 players, e-readers, in-dash car electronics, cameras, portable consoles, home entertainment, appliances and any device or sensor that connects to the internet to share data. And there is now a continuing evolution of mobile apps from multi-purpose websites or portals to single-purpose apps. This will compel companies to design apps as a service layer within an enterprise technical architecture that will enable seamless integration and connectivity between apps – critically important with the Internet of Things.

–Cloud is increasingly mainstream because that is where the data is moving. Two years ago, it was an option in core system RFPs, whereas today it is increasingly a preferred choice. The future will be the Cloud of Things, a world of distributed data, devices, technology, intelligence, computing, etc. that is highly connected and will enable the creation of products and services.

–The issue is “customer empowerment,” not “customer-centricity.” Customer-centricity is a 1990s/early 2000s term and is only a subset of customer empowerment. We used to shape the customer experience; now it is shaped for us by the rest of the world. Customer empowerment defines new engagement models. As customers gain market power, they are increasingly comfortable with technology, have a stronger voice and use it to demand collaboration. Insurers must view all technology as touching customers, because it influences the customer experience, both directly and indirectly, ultimately shaping and defining the customer relationship.

–As an industry, we are seeing challenges to our long-held assumptions and business models coming at us every day. Technology is now super-connected, creating new experiences, new products and services, new outcomes and new business and revenue models that were not possible a few years ago. Just as the iPhone provided a platform of possibilities, core systems – integrated with an array of new technologies like mobile, social, Internet of Things, cloud, big data, analytics, driverless vehicles, biotechnology and much more – have the potential to transform our industry … and to do it on our own terms.

So be inspired. Be creative. Be collaborative. Be bold. Let’s create and share the future together!