turning your insurance digital into gold through advanced ... · insurers can use data and advanced...

Insurance Webinar

Turning Your Insurance Digital into

Gold through Advanced Analytics

Rebecca Shockley

Rob McCullagh

March 2017

Today's Speakers

Rob McCullagh

Strategic Accounts Director

Presidion

Rebecca Shockley

Global Big Data & Analytics Research

Leader

IBM Institute for Business Value

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Agenda

• The Digital Revolution in Insurance

The coming together of Digital and Advanced Analytics

Starting your journey – How to plan for Success

What have others achieved

How to get started

• The Art of the Possible: Cognitive Analytics in Insurance

What it is and what makes it different.

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Insurance Customers

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http://www.axa.com.au/axa/axaaustralia.nsf/Content/Home+Page

The Storm

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© 2016 IBM Corporation

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Data is growing fast - in volume, variety, and complexity – yet

most organizations are unable to fully exploit its value

>2.5PB 1TB

of data is produced a day

by each cancer patient5

of unstructured data from 1

million customers is stored by

Walmart every hour3

292 exabytes

of mobile traffic by 2019, up from

just 30 exabytes in 20146

Petabytes of production data is

generated by oil field

sensors4

Only 1.0%

of world’s data is being analyzed (2013)2

Data generated for a single individual1

Explosive Growth of Data Globally

Terabyte (TB) = 1,024 GB; Petabyte (PB) = 1,024 TB; Exabyte (EB) = 1 Billion GB

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Modern data architectures must address digital challenges

DATA

How to keep up with the

mountains of contextual data

available to you, even when most

of it is unstructured in format

COMPLEXITY

How to overcome and solve for

great complexity by giving the

skill and knowledge of the

informed few to the empowered

many

VOLATILITY

How to stay ahead of

the ever-changing expectations

customers have for what’s

possible, leading your market

segment in new ways

Source: Fast start in cognitive innovation

IBM Institute for Business Value. © January 2017.

www.ibm.biz/cognitiveinnovation

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Advanced analytics has the power to transform business

Artificial intelligence

Simulation of human intelligence processes

Robotics

Conception, design,

manufacture, and

operation of robots

Machine learning

systems

Ability to learn and

improve without explicit

instructions

Natural language

processing Ability to understand human

speech as it is spoken

Deep

learning

Machine learning with artificial

neural network algorithms

Predictive

analytics

Predicting outcomes

using statistical

algorithms and

machine learning

Recommendation

engines

Analyze data and

suggest something as

per user’s interest

Create new ways of interacting with

customers

Reveal more powerful on-demand business

insights through real-time access to data

Enable business model – and ecosystem –

transformation

Business Value

Source: Fast start in cognitive innovation

IBM Institute for Business Value. © January 2017.

www.ibm.biz/cognitiveinnovation

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Insurers can use data and advanced analytics to better

understand all parts of the insurance value chain

More accurate

risk assessment

(Semi-)

automation of

underwriting work

Compliance

New products and

services empowered

by sensor data

Know your customer

(intent, emotions,

personality profile,

life events)

Predictive

underwriting and

fact-based risk

assessment

Support of contact

center agent

(Semi-)automation

of claims handling

and legal advice

Sophisticated pricing

Individualized

product offers

Personalized access

to insurance

expertise

Intermediary support

(Semi-) automation

of underwriting work

Compliance

Complaint

management

Sustainable

investments

Automation of

legal advice

Counter fraud

management

Marketing +

Product

development

Policyholder

acquisition Underwriting

Policy

administration Claims

Asset

management

Source: Rethinking Insurance

IBM Institute for Business Value. ©2016

www.ibm.bzi/rethinkinsurance

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Advanced analytics helps insurers to improve engagement,

predict information and transform

A US insurer uses advanced analytics to

sell auto insurance via web and mobile 1

Improved engagement

Virtual agent helps insurer

to better serve customers

and ensures increased

online conversions

Swiss Re uses analytics to help

underwriters identify and react to

emerging trends in the market 2

Actionable insights

Advanced analytics, along

with human experience,

helps underwriters take

better informed decisions

Rimac, a Peruvian insurer, uses

analytics to handle customized

commercial health policies 3

Enterprise transformation

Advanced analytics has

changed the way claims

are handled and leads to

improved profitability

Source: Rethinking Insurance

IBM Institute for Business Value. ©2016

www.ibm.bzi/rethinkinsurance

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Strategic Tactical Operational

Years Months Weeks Days Hours Now

Improve policy makers’ decisions with

Forecasts and Optimization

Help individual contributors take the

Next Best Action

Define the Strategy Run the Business

Time to Business Impact

Improve senior management visibility with

Key Performance Predictors

The Challenge

Aligning Strategy with Operations: Insights and Action

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Additional Insights and Value

-1 Month

-1 Week

Event

+1 Day

Forecast call

volumes

Forecast call types

Forecast outcomes

Intelligent call handling

Predicted call

outcomes

Predicted call

durations

Optimised routing

Staff scheduling

Upskilling for expected calls

Assessor scheduling

Supplier scheduling

Claims assessor routing

Supplier optimisation

Insight Driven

Investigations

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Three pillars to a comprehensive strategy delivering tangible

Return on Investment

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Analytics: Dawn of the cognitive era How early adopters in the Insurance industry have raised the bar for data-driven insights

An industry perspective from the IBM Institute for Business Value 14


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IBV research has tracked global analytic maturity for seven years

Reports

past

events

Assesses

past

outcomes

Identifies

potential

outcomes

Identifies (and may

automate

execution of)

optimal

outcomes

systems

Learning

systems

based on

probabilistic

reasoning

Analytic maturity

Increasing analytic maturity is cumulative; for

example, most prescriptive analytics use predictive

analysis; most cognitive systems leverage

prescriptive analysis.

Source: Analytics: Dawn of the cognitive era

IBM Institute for Business Value. © October 2016.

www.ibm.biz/cognitiveanalytics

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Bu

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Descriptive

Predictive

Prescriptive

Cognitive

Reporting

Last quarter’s results

Analysis

Product profitability

Discovery

# security breaches this

month vs. last

Alerts

Unusual activity

Forecasting

Trending analysis

Simulation

Impact of rising rates

Modeling

Predicting elasticity of

insurance rates

Optimization

Highest returning portfolio

based on risk appetite

Stochastic

Optimization

Managed exposure

to Cat Risks

Understands natural

language, hypothesizes,

adapts & learns

The Fourth Age of Analytics

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Welcome to the dawn of the cognitive era

74%

of organizations

have the

data and analytics

capabilities needed

to start their

cognitive journey

today of 6,050

organizations

surveyed globally




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Cognitive systems redefine the use of data to add fundamentally new

capabilities designed to impact business activities and outcomes

Advanced analytics respond to specific coded

requests to make

determinations,

analyzing predefined data

based on predefined

parameters

Cognitive

systems interact with humans

naturally to interpret data,

learn from virtually every

interaction, and propose

new possibilities through

probabilistic reasoning

Executive summary

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Operational use of cognitive is nascent, but we foresee rapid adoption

Cognitive

Explorers Analytic capabilities include the operational

use of cognitive computing solutions, as

well as use of at least one prescriptive

programmed techniques

Analytic capabilities include

the pervasive use of at

least one prescriptive

programmed analysis

technique

70% Cognitive

Capable

4%

15% Considering

Note number of surveyed:

n= 6,050 total respondents

n= 219 Cognitive Explorers

n = 4,229 Cognitive Capables Global

respondents

Global

respondents




Executive summary

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Early adopters – Cognitive Explorers – are market leaders within every

industry, now seeking a new frontiers of differentiation

4% Cognitive

Explorers

Present in all 19 industry

groups surveyed

84% report they outperform

competitors in revenue

91% report they are more effective

than similar organizations

89% report they are more efficient at

what they do than competitors

89% report they are more innovative

than most in their industry These organizations have at least

one cognitive system in already in

operation Source: Analytics: Dawn of the cognitive era



Executive summary

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In this industry perspective, we will compare the Cognitive Capable

organizations within Insurance to organizations globally

The sample size of Cognitive

Explorers in the Insurance

Industry is too small to be

statistically significant (i.e.

below 30 respondents).

The total number of

respondents in the Insurance

industry: n = 300

Total number of Insurance

industry respondents whose

organization is Cognitive

Capable: n = 216

Of organizations

in the Insurance

industry are

Cognitive

Capable …

ready to start

their cognitive

journey




Industry perspective

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Examining the data and analytics traits that differentiate Cognitive

Explorers emphasize what’s needed to succeed in the cognitive era

Executive summary




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Organizational cornerstone




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Cognitive organizations embrace the science of data, and foster a

culture that infuses insight into every action, interaction and decision

In the Insurance industry,

2 out of 10 respondents agree their

organization is ready to adopt cognitive computing





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Cognitive Explorers are evolving their data and analytics strategy to

encompass cognitive, while Cognitive Capables lag behind





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Most Cognitive Explorers recognize data as a strategic asset, governed

by business executives and lead by a Chief Data Officer

55% of Cognitive Explorers

have a business-driven data

governance system

compared to 37%

of global Cognitive Capables

and 31% in the Insurance industry

56% of Cognitive Explorers have

appointed a

Chief Data Officer

compared to 44%

of respondents overall

and 43% in the Insurance industry





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Most Cognitive Explorers have made significant investments in the

platform components needed for a modern data ecosystem

Cognitive

Explorer

Cognitive

Capable Insurance

Cognitive Capable

Cloud-based data storage or analytic services

Streaming data acquisition or analysis

Shared operational information

Data curation services

66% 42% 37%

Cognitive

Explorer

Cognitive

Capable Insurance

Cognitive Capable

61% 35% 31%

61% 39% 35%

61% 36% 30%

have made significant investments in have made significant investments in

Cognitive data foundation




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The Weather Company uses cognitive to map the globe’s atmosphere

The Weather Company (TWC) continuously maps 62 vertical miles of the atmosphere, all around the globe to deliver 15 billion forecasts to users along with 24 terabytes of data every single day.

It collects data daily from more than 100,000 weather sensors, 50,000 aircraft, millions of smartphones, buildings, and moving vehicles.

This is all possible because in 2012, TWC re-designed its legacy system into a new cloud-based, cloud-agnostic, data-driven infrastructure. Dubbed "The SUN Platform", the weather data, storage, and prediction capabilities of SUN make it a data platform at the intersection of IoT, analytics, cognitive.

Cognitive

Explorer

Cognitive

Capable Insurance

Cognitive Capable

collect weather data

35% 18% 16%

Cognitive data foundation: Case Study




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Cognitive systems require the ability to ingest and provision a wide

variety of data sources while decreasing its analytic latency

Cognitive

Explorer

Cognitive

Capable Insurance

Cognitive Capable

Social media

Customer-generated text

Real-time events and data

Market data

69% 52% 54%

Cognitive

Explorer

Cognitive

Capable Insurance

Cognitive Capable

65% 57% 60%

60% 52% 48%

65% 52% 54%

collect and analyze collect and analyze

Cognitive data foundation: Case Study




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Many Cognitive Explorers use 5 to 9 types of advanced analytics within

their organization, more than double that of Cognitive Capables

Skills of the future




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Cognitive Capable organizations use at least one advanced analytic

technique that could be enhanced by a cognitive solution

Adoption of prescriptive analytics techniques by Cognitive Capable organizations

Global Insurance Global Insurance

46% 38%

44% 39%

Image analytics

Machine learning

Natural language processing 38% 30%

Algorithmic automation 36% 28%

Sentiment / behavior analysis 36% 34%





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Cognitive Explorers use shared analytic resources to optimize valuable

resources while diversifying the available skillset overall.





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As you prepare to join the cognitive era,

we offer five key questions to ask yourself as you get started:

• Am I ready for the cognitive journey?

• How can I expand the use of my current prescriptive capabilities?

• Do I have the capabilities needed for self-service analytics?

• How can I transform business processes to actively engage with

customers?

• Is my organizational data platform designed for "fast fail" projects

and cognitive analytics?

Are you ready?

Course of actions / recommendations




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Questions and Answers

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turning your insurance digital into gold through advanced ... · insurers can use data and advanced...

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