Another new year begins and many of us are probably shopping for insurance again because our provider just put up the premium on our renewals. We think they do this because they want to make more money (which could be the case as well) but equally the amount of fraud (accounts for 5-10% of insurance costs) that happens puts pressure on the insurance providers which directly feeds back to our premium. In many cases, after checking the same data on us again by going through similar questions, we are offered a policy better than last year! Similar painful experiences when one needs to go through a claim settlement process where multiple parties are involved and settlement usually takes weeks or even months. Clearly, these are all not great customer experiences.

So, Amazon and Google are now entering the insurance business. Is that a weird proposition or a natural progression by virtue of them having access to so much data and information on individuals and businesses that they can leverage this asset and offer a more relevant insurance and better seamless experience? This is exactly the digital disruption insurers are facing today. But insurers have the advantage of not only having access to all this data but also the experience and license of providing protection for decades and hence the well-earned trust. In this blog, we see how insurers can bring together the new age ‘ABC’ for a true digital experience and keep themselves relevant and competitive. An end to end transformation of the insurance underwriting and claims process leveraging powerful advances in artificial intelligence, blockchain and connected devices (IoT) can bring the same experience to the customers that Amazon and Google are challenging to offer.

The Insurance Process and the current inefficiencies / challenges

The current pain points in the insurance underwriting and the subsequent claims settlement is very widely known. From the customer’s perspective, both the policy setup and the claim settlement process are long, tedious and unpredictable. They also don’t see any stability on their insurance premiums YoY even when they have made no claims. From the insurer’s perspective, the operational costs are escalating, frauds are increasing and customer retention is also costing them heavily.

Let’s bring together the A (AI), B (Blockchain), C (Connected Devices) for a ‘D (Digital)’ experience

Starting with one of the retail insurance underwriting and claims process (say car insurance), insurers could leverage the powerful combination of emerging technologies to transform the industry and create a lean efficient process leading to a much better customer experience.

Applying AI

The customers data is an asset the insurer already has access to (for existing clients) including all his contracts and claims. Insurers also have access to claims data of people who are not existing clients that is shared via joint initiatives (like MIB) to combat fraud. First step to create efficiencies would be to look at digitizing and automating the insurance policy setup/ underwriting process using AI technologies. Insurers can use both existing information/data and pull other relevant information from the internet on social websites, perform deep data analysis to create a personalized auto filled insurance policy for the customer. Existing documents may also be digitized and converted to usable information using image recognition techniques. The auto-filled forms created using these techniques can be used to communicate with the customer using chat-bots. Chatbots use AI technology advancements in language processing and generation and even sentiment analysis to make sure the customer is happy with the proposal ( 74% of the customers say they are happy to receive an automated digital proposal) . These automations can reduce operational costs tremendously for the insurers and improve customer experience multi-fold. Many of these initiatives are already under-way in the industry but let us look at combining this with other emerging technologies to get an end to end experience.

Benefiting from Blockchain 

The insurance policy created through an efficient automated touchless process could then be setup as a smart contract on a permissioned blockchain shared and agreed by the insurer, service provider, the customer and even the customer’s bank. This smart contract can be triggered automatically by a particular event – say an accident for a car insurance, a fire for a building or home insurance or a death for life insurance. The event can request a provider to initiate a repair process or trigger a request to health provider to initiate a treatment process and if the conditions of the contract are met, the contract can also trigger a payment creating a near real-time settlement experience for the customer. In addition, the cryptographically secured immutable nature of the blockchain would mean huge reduction in fraudulent claims as all events, claims and payments are captured in a timestamped manner. The shared ledger also means complete transparency for the customer through the entire process. All this timestamped information can then fed back into the data that the AI used for the underwriting process to create a realistic insurance plan. Another huge benefit from blockchain is for the claim data sharing between insurers which today is limited because of concerns of losing competitiveness. Blockchain enables creating the right channels of data sharing between insurers without needing to have a central intermediary and also allows selective sharing by setting up the right channels.

Combining the Connected Device

We mentioned the automated triggering of events to create an end to end experience. This is where the ‘C’ of digital experience comes. Smart Connected Homes can trigger an event on the blockchain in the event of a fire or a wearable health device could trigger an event for medical attention. Similarly connected car solutions like Wipro’s Autoinsights could relay real time information on the car’s health or even the driver’s habits. These connected devices not only can help trigger an insurance event, they also capture and keep information that can become another important data feed for the policy underwriting process. What if all this information from connected devices is also stored on a blockchain so these become immutable timestamped records further reducing fraud. This circular application of all 3 emerging technologies creates a very powerful proposition to create a true digital experience.