cognitive computing for insurers - the insurance network · 6 cognitive computing for insurers...

Cognitive computing for insurersA guide to understanding what cognitive computing is and how it already helps insurers

2 Cognitive computing for insurers

With analytics, insurers get key insights from data. With cognitive systems, they can turn those insights into deeper customer intimacy and engagement. All while improving processes and operations.

Traditional computing is programmed (that is, rules-based, logic-driven and dependent on organized information). Cognitive systems are probabilistic. They learn systematically and continuously. They don’t depend on rules and can process disparate and varied types of data, both structured (such as policy administration systems) and unstructured (such as natural language conversations).

With cognitive computing augmenting human expertise, insurers can discover new ways to delight their customers, by creating new experiences at every touch point.

INTRODUCTION

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Digital technologies have empowered customers and disrupt virtually every industry and profession. The insurance industry is no exception.

• Insurance providers fail to meet growing customer expectations for engagement.

• Insurance products are being commoditized as the dynamics of risk evolve.

• While economies of scale in administration and distribution provide some protection for incumbents, it also limits their ability to change quickly.

INDUSTRY TRENDS

Almost 20 percent of millennials say they would buy insurance from Google. 1


Insurers face new sources of real-time data from sensors, telematics, wearables and other mobile devices. The challenge is to interpret this data and incorporate new insights into traditional products, underwriting, operations and claims decision making.

According to a recent IBM Institute for Business Value survey2:

• Thirty-two percent of respondents have switched insurers in the last two years.

• Forty-one percent of these switched their insurer because it reacted too slowly to their changing needs.

• Only 37 percent of respondents said they fully trust their insurer.

• Forty-two percent of respondents said their insurer can be counted on to provide good service.

CLIENT NEEDS AND

CHALLENGES

IBM Watson™ can read 800 million pages per second.

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A cognitive computing system can:

• Understand images, language and other unstructured data in claims photos, underwriters’ notes and contact center recordings.

• Reason by comprehending insurance concepts, forming hypotheses and inferring and extracting ideas.

• Learn by developing and sharpening expertise with each new data point, interaction and outcome.

• Interact with employees and policyholders in a natural way that allows cognitive solutions to dissolve barriers between humans and machine.

BENEFITS OF COGNITIVE SYSTEMS “We’ll see cognitive taking on a greater role, it will come into play with

respect to risk analysis, it will come into play with respect to fraud, security and how we interact with customers.” 3

— Marty Lippert, MetLife EVP and Head of Global Technology and Operations


Using existing data, cognitive computing solutions can:

• Infuse intelligence into systems, helping insurers to effectively modernize operations across the enterprise.

• Help insurers rely on insight rather than instinct to get a view of the entire enterprise. It can also help streamline operations and make more effective decisions.

• Help optimize performance by predicting risk on an individual basis, fostering insight-driven producers, and identifying customers with the highest potential for growth.

• Help identify new opportunities. These solutions pinpoint the necessary questions to ask, and focus on the worthwhile risks that traditional processes with built-in biases often overlook.

IBM COGNITIVE COMPUTING SOLUTIONS

AND CAPABILITIES Ninety-eight percent of insurance executives familiar with cognitive computing believe that it will play a disruptive role in the industry.4

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Cognitive computing is already in use to help insurers in several key areas of business operations.

Use case #1: Customer self service

Use case #2: Call center representative assistants

Use case #3: Underwriting and claims tools

Use case #4: Regulatory policy compliance management

HOW COGNITIVE COMPUTING IS

USED TODAY

IBM believes there could be as many as one billion Watson users by the end of 2018. That includes 200 million consumers who come across the technology deployed by IBM clients in areas such as shopping, travel planning, buying insurance and accessing banking and government services.


The customer experience is interactive. The web is no longer simply a way to distribute marketing content. It’s now a conglomeration of views, discussions, trends and offerings that reach self-targeted audiences. One insurer in Germany increased satisfaction levels among customers by enabling faster and more focused complaint response.

Sample applications:

• Create unique customer experiences best suited to their needs and temperaments.

• Help reduce the time required to train new hires.

• Capture the expertise of top performers and accelerate the development of expertise in others.

USE CASE #1: CUSTOMER

SELF SERVICE A large US P&C insurer built a cognitive virtual agent that can answer a wide variety of consumer questions and differentiate the user experience based on key context variables.5

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A Japanese insurance company improved its customer center response rates by 11.3 percent. It deployed a cognitive computing solution that uses natural language processing capabilities to analyze inbound customer calls. As a consequence, employees in the planning department now have available capacity to conduct customer-facing activities that can help increase profits.


• Frequently asked questions

• Digital virtual agent as first-level support

• Automated routing of customer requests

USE CASE #2: CALL CENTER

REPRESENTATIVE ASSISTANTS “ I realized that the customer center is a repository of know-how after we

analyzed customer inquiries using IBM Watson Explorer. We continue to polish ‘raw stones’ (customer voices) to ‘jewels’ (insights) and strongly support everyone working with our agents.” 6

— Head of planning team, Contact center planning department, Japanese insurance company


RIMAC, an insurance company in South America, automates the claims review process for approximately 90 percent of claims. This automation decreases the time required for expert review by more than 90 percent and reduces fraud costs.


• Underwriting and claims tools that assist underwriters and adjusters in better analyzing complex cases

• Simplify the collection, triage and review of claims

• Automate manual analysis, to help train less-experienced staff more quickly USE CASE #3: UNDERWRITING AND

CLAIMS TOOLS “ A complex claim could take two days. Now it takes more like ten minutes.” 7

—Executive Vice President, Strategy and Finance, Insurance company in South America

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Monitoring risk and compliance across business processes is a challenge for most organizations. A system that has comprehensive knowledge of both existing and proposed insurance regulations across continents, countries, states and provinces is an invaluable tool in meeting this challenge.


• Provide traceability to audit why a particular decision is made

• Help compliance specialists streamline the process of managing constantly changing regulations

• Reduce manual effort to identify insurance-specific obligations from regulations and dynamically explore regulatory environment

USE CASE #4: REGULATORY COMPLIANCE

OVERSIGHT “We believe the future of business and regulation will be driven by the need for advanced technology alongside deep subject-matter expertise.” 8

— Eugene Ludwig, Founder and CEO, Promontory Financial Group


The first question insurers should ask themselves as they consider integrat-ing cognitive technology is: “Is our business ready to fundamentally change how we serve customers?”

After that, insurers should get answers to the following key questions:

• How can we identify emerging risk patterns before they occur?

• How can we create custom solutions rapidly to differentiate our offerings?

• How can we personalize the insurance experience based on more holistic, rapid audience understanding?

• How can we better capture and share expert knowledge?

• What are ways we can streamline operations to improve the customer experience?

• How do we create services that help customers throughout their lifetime?

GET STARTED WITH COGNITIVE

COMPUTING

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Whether you start to deploy cognitive computing with a complete system or a phased approach, implement cognitive computing judiciously and with purpose by following these steps:

1. Plan carefully.• Determine where cognitive capabilities are most appropriate for your organization.

• Consider implementing a tightly focused pilot project to build confidence and skills.

• Create a data strategy that results in the acquisition of the data needed for cognitive insights.

2. Prepare thoroughly.• Cognitive solutions are trained, not programmed. They learn with interactions,

results and new information that help insurers scale expertise.

• Identify those areas where you can use cognitive computing to build competitive advantage, such as augmented workers, operational efficiency improvements, or self-service capabilities.

• Control cost and build in flexibility by moving to core systems with sufficiently advanced architecture such as hybrid-based and cloud-ready, flexible product models

3. Progress continually.• Monitor progress to be sure cognitive computing matches your strategy.

• Encouraging innovation will help grow your team’s skill with component technologies.

• Build agile development and business service composition skills so your team can move quickly enough to capitalize on market changes.

INTEGRATE COGNITIVE COMPUTING INTO YOUR

ORGANIZATION


Why IBM?With more than a century of business transformation experience, IBM has developed a highly advanced portfolio of services and APIs. Now, with IBM Watson, IBM can help you create systems that understand, reason, learn, and naturally interact with humans. IBM has deep domain expertise: Watson is built for—and built on—industry and professional domains.

Data strategy: We offer a trusted approach that combines private, industry, and public data and ensure that our clients’ information remains theirs. Watson continues to learn through new alliances, helping industries forge new paths.

Cloud strategy: We’re infusing industry-focused cognitive solutions across our portfolio and making them available on the IBM cloud platform. Cognitive solutions that are tuned and scaled for your business on leading cloud platforms.

For more information

To learn more about cognitive computing for insurers, please contact your IBM representative or IBM Business Partner, or see: ibm.biz/insurance-cognitive-era

WHY IBM?

http://www.ibm.biz/insurance-cognitive-era

WHY IBM?

© Copyright IBM Corporation 2017

IBM Corporation Route 100Somers, NY 10589

Produced in the United States of AmericaApril 2017

IBM, the IBM logo, ibm.com, and IBM Watson are trademarks of International Business Machines Corp., registered in many jurisdictions worldwide. Other product and service names might be trademarks of IBM or other companies. A current list of IBM trademarks is available on the web at “Copyright and trademark information” at http://www.ibm.com/legal/us/en/copytrade.shtml

1 IBM Institute for Business Value, Capturing hearts, minds and market share - How connected insurers are improving customer retention, 2015

2 IBM Institute for Business Value, Rethinking insurance. How cognitive computing enhances engagement and efficiency, 2016

3 Risk and the Cognitive Era: Getting Closer to Customers with Cognitive, ibm.com/csuitestudy



6 IBM Case studies 2016

7 RIMAC uses IBM Analytics and GBS to find hundreds of millions of dollars in fraud and leakage, https://youtu.be/KJNQfIfu8Js

8 IBM Announces Planned Acquisition of Promontory to Transform Regulatory Compliance with Watson, ibm.com/press/us/en/pressrelease/50599.wss

http://www.ibm.com/legal/us/en/copytrade.shtml

http://www.ibm.com/csuitestudy

http://www-03.ibm.com/press/us/en/pressrelease/50599.wss

cognitive computing for insurers - the insurance network · 6 cognitive computing for insurers...

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