How technology is influencing the insurance industry

Insurers are leveraging new technologies to gain insights from their data and transform their business for the digital age

Jacqui Griffiths
By Jacqui Griffiths on 15 January 2018
How technology is influencing the insurance industry

This article first appeared in the Winter 2017 issue of The Record.

Insurers today are negotiating a unique and complex environment. “Low interest rates and soft market conditions are driving the need for increasing efficiency,” says Dennis Vanderlip, director, insurance industry solutions at Microsoft. “Competition is intensifying as non-industry entrants and fintech innovators provide increasing choice and raise consumer expectations of frictionless, personalised experience. The digital technologies that enable that experience continue to develop, bringing with them a data explosion. And for insurers that can derive deep insights from that data there are exceptional opportunities to enhance agility, grow profitable business and differentiate themselves from the competition.”

Personalisation is the key word when it comes to customer experience, but research by Celent has found that 37% of insurance customers prefer using smart technology rather than having to speak to someone. “Today’s insurance customers expect immediate answers to their questions wherever they are online – which is more likely to be on social media than an insurer’s website” says Vanderlip. “At the same time, insurers are keen to move less complex transactions and enquiries to automated channels. Cognitive services, machine learning and chatbots are empowering insurers to create conversational, personalised and insightful interactions that transform the customer experience. For example, Progressive Insurance’s Flo chatbot combines artificial intelligence (AI) and quoting technology to answer questions and start the auto insurance quoting process on Facebook Messenger. For more complex discussions, Progressive representatives can pick up the conversation by phone or private message.”

EIS Group has leveraged Microsoft Azure Language Understanding Intelligent Service and Microsoft Bot Framework services to embed AI capabilities in web and mobile experiences for users of its core and digital platform for policy, billing, claims and customer management. “Vicki, an intelligent assistant chatbot within our customer self-service apps, uses natural language processing to converse with customers to provide policy information and assist them to make claims,” says Fazi Zand, senior vice president of products at EIS Group. “Another chatbot can support an agent – via a conversational interface – to search, access customer data, portfolio and opportunity information, as well as their calendar and upcoming tasks.”

Where multiple stakeholders are involved in a policy, insurers need to enable secure, real-time insight for all while providing an immutable audit trail – and blockchain is providing the solution.

“Blockchain can improve the efficiency and speed of traditionally inefficient complex commercial insurance processes,” says Vanderlip. “Marine insurance, for example, is being transformed by smart contracts enabled by this technology, which is dramatically decreasing paper-based transactions while providing a trusted platform for customers and carriers where all contract parties have real-time visibility.”

Another key driver for insurers to maximise the value of their data is risk modelling. “An increasingly unpredictable risk environment, combined with regulatory changes, makes risk modelling a perpetual focus for insurers,” says Vanderlip. “They need to be confident that they can respond quickly to an unexpected event, and that they can assess the impact and the opportunities it brings. That means getting insight from huge volumes of data, almost in real time.”

The cloud provides an agile, scalable and flexible technology foundation to improve overall modelling capabilities, better respond to regulatory pressures, and better model and anticipate risks. For example, RMS delivers a ¬next-generation approach to exposure and risk management through its RMS(one) modelling and analytical solutions. Hosted on Microsoft Azure, the tools enable insurers to mine deep into the huge amounts of data they hold to find growth opportunities and minimise potential losses.

By leveraging high-performance computing (HPC) in the cloud, insurers are achieving levels of risk modelling that were not possible before. AXA Global P&C, which manages reinsurance programs for global insurance provider AXA Group, created an HPC solution based on the Microsoft Azure platform and Azure HPC Pack when it needed to create complex catastrophe models for floods and other natural disasters. Now, the company can analyse huge volumes of detailed topographic data, enabling it to improve insurance services.

In its Insurance Technology Vision 2017, Accenture notes, “The biggest innovations in insurance over the next three years will not be in the technology tools themselves, but in how we design them with customers, agents, employees and other human partners in mind.” That principle is being put into practice by insurers today as they leverage AI, IoT, blockchain and cloud technologies to deliver the insights they need for agile, profitable and competitive business.

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