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And the Winner Is…Artificial Intelligence!

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.

Medical Homes Change the Game

Washington county and Wisconsin are right in the middle of a seismic shift in the delivery of healthcare in America – from primary care as a loss leader for the big hospital corporations to medical homes for employees right at the work site.

The latest company to install an on-site clinic is West Bend Mutual Insurance, the largest employer in the county. West Bend has reportedly contracted with QuadMed, a subsidiary of QuadGraphics, another major employer in the state and county.

This clinic will be the “silver lining” for West Bend’s 1,100 employes, who have always enjoyed great benefits and work environment. “Silver lining” is the tag line for West Bend’s advertising and refers to the protection offered to policyholders. But it also fits what the new benefit will do for its workforce.

They will enjoy convenient, relationship-based, long-term-oriented, proactive and cost-effective primary care on campus. Those adjectives do not generally apply to the in-and-out, symptom care in big system medicine.

West Bend and its people can expect to see significant improvements in their workforce health metrics, like the percentage of smokers, cholesterol levels, blood pressure and even body mass index.

They can also expect to see health costs drop 20% to 30% over time. That’s been the audited experience of QuadGraphics, which pioneered on-site health care starting in 1990. Its QuadMed now provides contracted medical homes for 120 major employers in 90 clinics across the country serving 150,000 members. That includes NML, Briggs & Stratton, Kohler, Rockwell and MillerCoors.

Quad is one of several dozen entrepreneurial providers that have jumped into the business of on-site or near-site clinics. Quad started with its own employees and fulltime doctors, but now offers a menu of other options, such as clinics headed by a nurse practitioner (NP).

Serigraph contracts for its on-site clinic with Interra Health, a Brookfield-based provider. We also contract with Paladina Health, which has roots in Wisconsin, for part-time primary care doctors. Five other manufacturers in the county also use Paladina’s “concierge” doctors for their people.

HealthStats, Charlotte N.C., installed a clinic headed by a physicians’ assistant (PA) for the West Bend School District in 2013. Savings are already apparent. Office visits, for example, typically run $22 to $40 at on-site clinics vs. $160 to $190 at the big systems. Lab tests cost about half of what big systems charge.

HealthStats also won a trifecta with a contract for a clinic for the county, city and school district in Waukesha. It also services city of Kenosha employees. Other local governments and school districts are jumping on the bandwagon.

You get the picture. The nature of primary care in America is changing rapidly toward a model that keeps people well and out of the expensive, dangerous hospitals.

The big healthcare corporations have realized the challenge, and some, like Froedtert and Pro Health, are overhauling their business models to offer clinics tailored for employers and their employees. They are late to the game, but appear to be responding to the competition.

A few hospital-based systems, like Bellin Health of Green Bay and Theda Care of Appleton, saw the train coming early and moved fast into direct contracting with private companies. Their clinics center on patients as customers, as opposed to the specialist -centered model of the big systems that drove U.S. healthcare into unsustainable hyperinflation.

Here’s a major piece of irony: The Affordable Care Act, aka Obamacare, was supposed to address the cost issues but has worked to drive up premiums. It is employers and their entrepreneurial vendors for medical homes that are bending the curve for American health costs.

Disruptive innovation – if ever an industry needed disruption, it’s U.S. healthcare – is just getting started. Some big players are joining the revolution. DaVita, the nationwide dialysis chain, bought the predecessor to Paladina. Humana bought the Concentra clinic chain. Walgreens runs clinics. Not all are holistic medical homes, but they are headed in that direction.

Just recently, QuadMed and Walmart cut a deal to run a pilot that moves Walmart’s rudimentary clinics into a fuller range of services, headed by a PA or NP. Office visits are $40. If the pilot works, and Walmart puts its full muscle behind this new delivery model for primary care, look out.

The concept behind medical homes is sound. They allow employers to attack both sides of the healthcare equation – health and health costs. The contracted medical teams can home in on every employee with a chronic disease condition, the source of most costs. They are passionate about getting the disease conditions under control. Better and better predictive analytic tools help to identify those high-risk employes.

On the economic side, if expensive specialist care is needed, the teams can direct patients to the highest-value providers for both quality and price. With price variations routinely of more than 300%, there are easy pickings for savings. New transparency tools highlight the best buys. In short, the medical homes put employers back in charge of the medical supply chain.

The happy ending of this blog is that Washington county and some parts of Wisconsin are leaders in the medical home movement. We are early winners in terms of big savings.