An insurance start-up recently settled a claim within a few seconds. Another insurance-tech company offers insurance based on selfies! Sounds futuristic, or fake? It isn’t, it reflects a better future for both people buying insurance and companies offering risk products. Like food delivery, banking and cab- hailing apps, technology – or more specifically – artificial intelligence, is set to disrupt your insurance buying and settlement experience, forever.

The good news is that this disruption is likely to be hugely advantageous for you. The better news is that it will also be a win for insurance companies. It will save them money, help them assess risk more accurately, prevent damage before it happens and process your claim very fast.

Understanding AI and Life Insurance

If all this sounds too complicated, consider this. What if someone says that Mr Gupta is like Mr Subramaniam, who, in turn, is like you? Let’s narrow things down a bit more. In the eyes of your insurance company, your neighbour – whose weekend binges are legendary in the neighbourhood – is the same as you, someone who doesn’t drink or smoke. Sounds unfair, right? This may be a bit of a stretch, but, it does reflect reality. In the absence of enough data about you or every individual whose risk they cover, insurers run analytics to aggregate people into risk groups. They then charge a similar premium from each risk group. This is advantageous to those who take more risks in life and
disadvantageous to those who end up paying an extra premium even though they live relatively safer lives.

Let’s consider more scenarios. An honest family that has suffered a tragedy wants to claim the assured amount on term life insurance – a product that these days provides a big safety umbrella for a reasonable premium. This honest family wants the claim to be processed fast to tide over a looming financial crisis. However, insurance companies can take a few days’ time, and this is not because they do not want to settle the claim. The companies take time to assess if the claim is fraudulent – the industry faces several dubious claims each year. As a result, even honest claims take time to be disbursed.

Let’s take another scenario. What if the site of an accident or specific actions post an incident are critical to how a life insurance company pays out the claim? What if there were help at the time of the accident or real-time assessment of the incident to not only process the claim faster, but also assess damage more accurately? Sounds good, right?

How artificial intelligence works?

Artificial intelligence through a variety of tools – right from machine learning to text analytics to video/image analysis is all set to address the problems mentioned above and many more. For instance, the availability of more data about you – through wearable devices such as fitness bands or sensors in your car/home or even more data through ‘smart city’ technology will help insurers come up with a more realistic assessment of you and the circumstances around you at a given point of time. This can also happen through data mining of your social data and medical history. This is great news because if you live a safer life, don’t drink or smoke, exercise regularly and don’t indulge in risky behaviour like driving without a seatbelt, the insurance company would be able to offer you the same cover at a much lower cost.

The same applies to the settlement of life insurance claims. There is the possibility of insurance companies using drones for quick assessment of an accident site to judge the circumstances for a claim. Smart devices can warn a user about a riskier situation even before the insured enters one. The ideal scenario for any family is to not reach a stage where tragic circumstances require an insurance claim. More data and connect with you through IoT (Internet of Things) devices, image recognition, video analysis also help establish identity, thereby considerably reducing the possibility of fraud in insurance claims. This means, faster processing of claims, something good for a grieving family.

What more data – specific to you – means is that no proxies are used for you to evaluate the risk you face. It also means that the insurance buying experience itself becomes smoother. Ultra-smart chatbots can now engage in conversation with you, answering unending questions specific to you, perhaps much better than an old-world insurance agent. Personal identity can also be verified much faster helping you sign up and take an insurance policy online, in a few minutes. The great thing that it will bring is the evolution of insurance products specific to a need – in the world of auto insurance, for instance, artificial intelligence will enable the concept of pay-per-mile car insurance.

The bottom-line

All this is also good news also for insurance companies, which, in turn, can be good news for you. A more accurate assessment of risk will help insurance companies charge more or avoid clients with higher risk profile – thereby saving more money to cover you. Lower fraudulent claims again leave more money for you in the insurance pool. Faster processing of insurance purchases and claims saves insurance companies money, that can translate into lower cost of premiums.

All this use of artificial intelligence, of course, will take some time to come. But, this future is not very far away or unreal. What we are looking at is a complete disruptive transformation for both the insured and the insurance company. What could be better than technology enabling this win-win situation?

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In the era of 24-hour news coverage, and in the aftermath of highly publicized catastrophic events including hurricanes, earthquakes and terrorist attacks, insurance policyholders have very little patience for a protracted claims process.

At the risk of alienating customers, especially younger policyholders who grew up in a digital age, the insurance industry must adapt to keep up with the speed of business and increased expectations regarding how companies administer claims.

Consumer expectations aside, there’s also pressure from internal stakeholders who expect up-to-date evaluations of risk and more efficient business practices that drive down costs and create competitive advantages.

So, how can insurance companies redesign their business models, particularly the claims administration process?

Leveraging the wisdom of crowds

With these challenges in mind, innovative insurance companies increasingly see a reason to incorporate alternative data sources as an element of their insurance contracts. Given the prevalence of smartphones and the general public’s willingness to use their social media accounts to share events as they happen, real-time social media posts are often the fastest indications of a breaking event. In fact, governments, news agencies, and businesses commonly rely on social media to keep track of breaking news stories.

The real-time nature of social media dovetails with the need for insurance companies to pick up the pace when processing claims. When analyzed correctly, social media data can inform a parametrics insurance contract, triggering the payment of a predetermined amount when conditions exceed certain metrics, such as the wind speed associated with a hurricane or tremors accompanying an earthquake. In addition to natural disasters, alerts derived from social media could justify payouts of a parametric insurance policy covering a man-made event, such as a terrorist attack.

In short, when a significant incident impacts policyholders, a parametric contract that relies on social media alerts can generate a payment. And there’s an added bonus: After an event, the real-time information from social media becomes historical information that helps underwriters assess future policy risks.

A front-row seat to insured events as they unfold

As the recent hurricane in Puerto Rico or the 2017 terror attack in the Parson Green Underground station in London demonstrate, a spike in volume of real-time social media posts is a leading indicator of breaking news. In the simplest terms, social media posts emanating from Puerto Rico or in the vicinity of the Parson Green station provided compelling evidence of an incident. Over time, as the volume of posts grows, the evidence of a covered event becomes incontrovertible.

Nonetheless, insurance companies don’t need to wait until there’s a vast amount of social media posts to initiate the claims process. With the right tools in place to mine social media, insurance companies can be alerted to an event before the volume of posts surges exponentially.

Whether an insurance company relies on the first post to act or decides to wait until the volume of social media posts mushrooms, the corroborative nature of social media, including the analysis of geolocated posts, offers an up-to-date portrayal of events.

While incorporating alternative data as part of parametric insurance contracts may face organizational resistance, making use of social media data benefits those covered by policies, as well as the insurers themselves — removing the burden of assessing a loss solely off insurance adjusters and shortening the time needed to assess a loss and issue a payment. Customers who are helped quickly are also less likely to complain about service and may support the insurance company publicly, contributing to brand strength.

The rush to leverage social media alerts

Up until recently, the insurance industry has resisted the pressure to jump on the technology bandwagon. However, in the midst of unrelenting changes in consumer expectations, and the proliferation of online insurance upstarts determined to disrupt the industry, many insurance companies are in the process of overhauling their business models and embracing the latest technology.

In particular, the claims process is ripe for change. While the industry’s staid approach to claims used to suffice, today’s policyholders no longer deem it acceptable for insurance companies to take months to evaluate and pay out claims. In order to attract and retain customers, while reducing claims processing costs and creating competitive advantages over less refined competitors, insurance companies must build business models that allow for a faster, more agile response. That means looking beyond the traditional tools and approaches for a nimble solution with the potential to support the accelerated payouts policyholders expect.

Using alerts derived from social media provides claims processors with real-time, actionable alerts, including images and video that offer third-party evidence of an event and the extent of the damage, and consequently, the ability to expedite and automate policy payments. Insurance companies that tap into social media data to speed the claims process may impress policyholders by avoiding typical operational challenges and may help the strength of public brand perception.

The competitive landscape of shifting business models may propel many insurance companies to use social media data as an indispensable linchpin in their revamped claims administration process.

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Many professionals use data and analytics skills to produce something of value, but only a few get media buzz.

Career topics are the most popular of the articles I write. Many people write me with questions about careers in analytics, nearly all of them from people whose idea of an analytics career is a job with a data scientist title.

There’s an industry joke that a data scientist is just a statistician who lives in California. The title has only become popular in recent years, beginning with a handful of positions in Silicon Valley and spreading like wildfire as word as the job was glamorized in the media and rumored to command stupendous salaries.

In practice, “data scientists” often do a lot of programming and not so much analysis. They may not have much subject matter expertise or work closely with those who do. Some people love it, but many will find greater satisfaction in other jobs where practitioners have a deeper knowledge of applications, spend more time interacting with other people and have more influence on the process.

If you’re considering a career in analytics, think broadly and learn about some of these less publicized professions. You may find a better fit for your personal interests than a plain vanilla analytics role.

To learn what any job is really like, get out and meet the people who do it – face to face. Attend a meeting of professional organizations for a job that interests you. There you can get the scoop from experienced professionals, find out how they really spend their time, what you might accomplish in the job, education requirements and more.

Here are 10 analytics jobs you may not have considered, with links to professional organizations where you can learn more.

Actuary

Actuaries use data and analysis to manage risk. They’re the heart of the insurance industry, and also take important roles in the financial services industry and many large corporations and consultancies.

• Be An Actuary
• Casualty Actuarial Society
• Society of Actuaries

Economist

Economists study the creation and transfer of wealth. They are influential in academia and government, but also in banking and other industries. Many economists have industry specialties such as healthcare, agriculture or law.

• Agricultural & Applied Economics Association
• American Economic Association
• American Law and Economics Association
• American Society of Health Economists
• National Association for Business Economics
• International Association for Feminist Economics
• International Economic Association
• National Economic Association

Epidemiologist

Epidemiologists research disease – when it occurs and where, what causes it and what prevents it. Epidemiology is central to evidence-based medicine.

• American College of Epidemiology
• American Statistical Association Statistics in Epidemiology Section

Forensic Accountant

Forensic accountants integrate skills in accounting, investigation and analytics in support of litigation or criminal investigation.

• Forensic CPA Society
• Association of Certified Fraud Examiners

Market Researcher

Market researchers investigate the likes, wants and behavior of consumers.

• American Marketing Association
• ESOMAR
• Insights Association

Meteorologist

Meteorologists analyze weather data and patterns to forecast weather conditions.

• American Meteorological Society
• National Weather Association

Nurse

You know what nurses do. At least, you know what some nurses do. But you may not know that nurses carry much of the responsibility for healthcare quality data collection, analysis and reporting in hospitals, nursing homes and other medical facilities.

• American Health Quality Association
• American Nurses Association
• National Association for Healthcare Quality

Operations Research Analyst

Operations research analysts use mathematical methods such as optimization and simulation to maximize business process efficiency. They have prominent roles in the logistics and transportation, defense and insurance industries.

• INFORMS
• Military Operations Research Society

Quality Engineer

Quality engineers use statistical process control and other methods to improve business and production processes in manufacturing, healthcare and other industries.

• American Society for Quality

Quantitative Analyst

Quantitative analysts are data analysis professionals who work in the finance industry and forecast changes in the valuation of stocks, bonds and other financial instruments. Known in the industry as “quants,” they are instrumental in making financial investments profitable and managing risk.

• American Society for Quantitative Analysis
• Global Association of Risk Professionals
• International Association for Quantitative Finance
• PRMIA
• Society of Quantitative Analysts

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If you’re like most people, calling an insurance company isn’t among your favorite activities. That’s because the insurance industry is one of the least innovative areas for customer experience, meaning that customers typically come away from their interactions disappointed and dissatisfied. However, things are definitely changing, and artificial intelligence is playing a large role. The fast-growing technology has the potential to disrupt the entire industry and greatly improve the insurance customer experience.

Artificial Intelligence In The Claims Process

The insurance agency is notorious for its outdated processes. Filing a claim often looks the same today as it did decades ago because the industry isn’t consistently leveraging new technologies that are available to them. If an employee is busy or on vacation, a claims request could sit still until the right person is back. The outdated processes make it harder for agents by increasing the workload and forcing them to work with antiquated systems and frustrated customers.

However, AI can be applied to improve the claims process. Claims currently are touched by multiple employees. However, a new process of “touchless” claims doesn’t require any human intervention. This process uses artificial intelligence and other technology to report the claim, capture damage, audit the system, and communicate with the customer. The potential here is huge, as the process could allow clients the chance to file claims without having to wade through red tape.

Companies that have already automated some aspects of their claims process have seen a significant reduction in processing times and quality. AI-powered claims could also fight against one of the most costly elements of the insurance industry: fraudulent claims, which cost the industry more than $40 billion a year. Instead of relying on humans to manually comb through reports to catch inaccurate claims, AI algorithms can identify patterns in the data and recognize when something is fraudulent.

Future Of AI And Insurance

The industry is definitely ripe for AI disruption. Customers expect to be able to interact with companies through modern technology; a recent survey found that 74% of consumers say they would be happy to get computer-generated insurance advice.

Many insurance companies are already using artificial intelligence to some degree, and the number of companies following in their footsteps is sure to increase dramatically over the coming years. Artificial Intelligence has never been less expensive or more accessible, which means most companies don’t have a reason not to adopt it in at least some form.

Chatbots

Chatbots work through messaging apps many customers already have on their phones, which makes them a natural next step in customer interaction. In order to truly be effective, chatbots must have natural language processing and sentiment analysis so they can understand what customers are really asking. Effective chatbots can process concerns that are either typed or spoken from customers and provide personalized service. In the insurance space, chatbots can be used to answer basic questions and resolve claims, as well as sell products, address leads, or make sure customers are properly covered by their insurance.

Marketing And Underwriting

Insurance is a competitive market, so a strong marketing strategy is vital. Traditionally, insurance companies used blanket methods like cold calling customers, but today’s customers expect personalized sales tactics. AI can pull in customer data to create a full profile that can be used to offer only relevant insurance products and remember a customer’s preferences.

Instead of spending valuable time and money on the underwriting process, which typically includes invasive questions and surveys about to dictate premiums, Artificial Intelligence could automate the entire process. Bots could potentially scan a customer’s social profile to gather information and find trends and patterns. For example, someone who has a healthy lifestyle and a steady job may be able to be connected to being a safer driver, which could lower insurance premiums. AI can analyze data better than humans to more accurately predict each customer’s risk, thereby providing customers with the right amount of insurance and companies with protection from risky customers.

Data

Insurance is driven by data, and it has a huge effect on the company’s bottom line and the satisfaction of the customer. A recent study found that nearly 80% of insurance executives believe artificial intelligence will revolutionize the way insurers gain information from their customers, with more than half saying the biggest benefit is being able to leverage better data for improved insights into the customers.

Telematics, or wireless communication of data back to an organization, is expected to be a huge area of growth for insurance. Many insurance companies already offer discounts to customers who transmit their driving data back to the company. Telematics and artificial intelligence can take this one step further by recognizing GPS patterns with the data, inferring road and traffic conditions, and even predicting and helping avoid accidents, which could potentially lead to fewer claims to process and safer and more satisfied customers.

The insurance industry has long been bogged down by outdated practices. However, the combination of a new wave of thinking and newly developed artificial intelligence technology has the potential to completely change the customer experience to provide great service in a way that resonates with modern customers.

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