This article was originally published in the Spring 2019 issue of The Record. Subscribe for FREE here to get the next issue delivered directly to your inbox.
From the smartphone at people’s fingertips to the apps and platforms they use for work, shopping and leisure, technology has transformed the business environment. Insurers, like other sectors, need to adapt to this new landscape with innovative business models, fresh ways of engaging with consumers and proactive, personalised experiences centred on each customer’s immediate needs and expectations. Data – and digitisation – is key.
“Digital technology holds a big payback for insurers,” says Bijesh Jacob, senior vice president of technology at ACORD, an industry organisation that develops electronic standards, standardised forms and associated tools for insurers. “Our own research – across 8,000 ACORD participants – has found that insurers who invest in developing digital capabilities capture tangible benefits including lower-than-average operating ratios, strong agent relationships, and boosted branding, positioning and attractiveness to talent. High performers were able to simultaneously execute against the four fundamental insurance strategies of customer intimacy, product leadership, innovation and operational excellence.”
Jacob emphasises the need for insurers to optimise their processes now and notes a welcome trend towards digitisation, especially among larger insurance firms. “A lot of the industry is still quite manual, and in the next few years companies need to be using technology to increase capacity, simplify existing processes and digitise data coming in and out,” he says.
“Since 2018 we’ve seen a growing trend for insurers in mature markets to bring in chief digital officers so they can focus on their digital platforms. Many companies are also partnering with insurtechs to help with that. In developing countries, insurers don’t have the legacy technologies you see in mature markets, so it will be a lot easier for them to adopt new technologies and deploy products for their specific markets.”
So, which technologies should insurers be looking at to enable true customer-centricity? “Artificial intelligence (AI) and machine learning will play a big role,” says Jacob. “The insurance industry can make great use of AI, machine learning and natural language processing, along with various other technologies that AI brings to bear.”
As the cloud has significantly reduced the cost of entry for AI, Jacob says, a lot of ACORD members are spending time, money and effort in that space. “All of that investment goes to getting data and using it for internal analytics, understanding the customer, and providing information to clients,” says Jacob. “Across all these areas, the overarching theme is better data and the use of cloud and AI, which enables insurance organisations to support capital markets-type plays and gain insights much faster than they would have been able to do even five years ago.”
TAL, one of Australia’s leading life insurers, is using Azure Machine Learning to make sure it delivers the best value to its four million customers. “The life insurance industry is facing massive change, and at TAL we want to be the leaders of that,” says Dan Taylor, general manager of innovation at TAL. “That means leveraging all the new opportunities presented by data and machine learning.”
The solution enables levels of speed and scalability that were simply not possible before. “Azure Machine Learning really helps scale the data science work at TAL and will allow us in the future to run concurrent projects,” says Fiona Bounais, head of incubator at TAL. “In the early days we’ve been quite constrained by our infrastructure, whereas now we are spinning models up really quickly.”
Azure Machine Learning has enabled TAL to drastically reduce its time to market and optimise quality control. Where previously the company’s quality assurance team reviewed a random sample of 2-3% of cases, now it reviews 100% of cases to ensure consistency and fairness to all customers. In addition, the time it takes to bring new experiments to production has been reduced from two months to a couple of hours.
“All the time we’ve saved is time we can invest in things that will have impact on business and customers,” says Gregor Pacnik, innovation delivery manager at TAL. “I haven’t been excited about any technology as much as I have been about Azure Machine Learning. It’s absolutely brilliant, what it does for data science.”
TAL’s story shows just how much insurers can achieve with the tools and technologies available today. “We’ve seen insurance companies using the internet of things to help personalise their products – for example, using plug-in telematics devices for drivers,” says Jacob. “Now, the industry is looking at how it can apply AI to solve issues, or how it can acquire data with compliance and privacy in mind, to drive personalisation forward and reduce costs from both the consumer’s and carrier’s perspective.”
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