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AI-driven insights can re-energise the insurance sector

The insurance industry has come under real pressure over the past decade or so. The fintech revolution has meant that smaller and more agile startups are able to offer a variety of new services to consumers and businesses. These services are not only more interactive and based on the latest technologies, but they are also services that bigger insurance firms cannot easily offer.

This increased competition from newer market entrants is a growing problem for more established insurance providers. But with more data available to insurance firms than ever before, there is an opportunity to embrace the technological changes that are taking place. While their size makes it harder to drive technological advances themselves, insurers are increasingly collaborating with startups and are well positioned to make the most of the data they hold.

Insurers, CRM and data

Dorian Selz

Dorian Selz

A recent Economist article stated that the ‘world’s most valuable resource is no longer oil, but data’. This is certainly something that could ring true for insurance providers. Insurance is an industry that has always been awash with data, and as consumers and businesses increasingly manage their insurance online, the sheer volume and breadth of that data is only going to increase. This is why so many insurers have invested in Customer Relationship Management (CRM) systems.

The data available on insurance customers is rich in insight, insight that if deployed correctly would allow insurance firms to really understand the needs of those customers and address any issues before they arise. But even when deploying CRM, the industry has traditionally struggled to really monetise this asset, held back by a combination of regulatory concerns, a lack of technological know-how and a reluctance to adopt a business model that truly reflects the value of data.

Now that technology has evolved to help insurers with data analytics, so the value of data has increased exponentially. Some insurers have in fact got to grips with structured data – data that comes in a format and file type that is easily stored, managed and accessed by CRM systems– but the reality now is that the most insightful data available to insurers is now unstructured, such as social posts, emails, web pages and call centre transcripts.

Do insurers really know their customers?

Unstructured data is potentially enormously revealing to insurers, yet most CRM systems are not capable of storing and managing unstructured data. It comes in such a wide variety of formats and even the world’s biggest CRM firm Salesforce has estimated that only 1% of a company’s data is used by its CRM system.

Another issue is that insurers store their customer data in a multitude of different enterprise systems. It is not uncommon for an insurer – whether offering retail, corporate or reinsurance services – to have two different structured databases (one for pricing and one for contracts) in addition to other systems to store customer data.

This means that even finding customer data can be a challenge, before insurers can even think about extracting actionable insight from it. With no 360-degree view of customers and a real inability to search data in a multi-org environment, there is a widespread lack of customer understanding which can have a significant impact on customer churn, as well as lead generation and lead prioritisation.

Deploying AI to mine unstructured data

Any insurer seeking to get maximum value from its data should be developing and shaping their business to put data at the core. This is not a small undertaking, but given the economic potential of data, a step that should be on the agenda for all business leaders within insurance.

A good place to start when addressing the unstructured data that holds so much insight for insurers, is in utilising artificial intelligence (AI). AI uses advanced machine-learning algorithms to create an analytic power far greater than anything used previously, meaning it can extract great insight from data.

Some insurers have certainly made progress when deploying AI and machine learning to their structured data, and extending that to unstructured data could help established insurers ward off the threat from insurance-based startups, and transform the industry in the process.

Improved underwriting – underwriting is a costly process, that often involves invasive questions and is seen as laborious and time-consuming. AI can automate the entire process, scanning unstructured data to gather the required information and identify patterns and trends. AI can analyse submissions to identify risk information far more effectively and accurately than humans, starting the underwriting process and providing protection to insurers from potentially high-risk customers.

Deeper insight for better service – a key use of AI is to understand customers much more comprehensively. Not only can AI manage unstructured data but it can also work in a multi-org environment, capturing data stored in different and disparate enterprise systems. This means that customer issues can be identified in advance and makes cross-selling and up-selling an easier task. Service is improved, churn is reduced, and customer retention is increased.

More efficient claims – the way in which claims are filedhasn’t changed significantly for decades and is an area of insurance ripe for updating. A typical claim would involve interactions with a number of employees at the insurer, yet AI automation can make the process much quicker and more efficient. Using AI to assess the reported claim, capture and damage new claims and interact with the customer has enormous potential in delivering a better experience for the customer. Dashboards offer direct access to claims related information which is stored in multiple sources and systems.

Insurance is an industry that has rarely been at the forefront of innovative technology but now has a rare opportunity to make use of the unstructured data at its disposal. Doing so will help insurers deliver an unparalleled customer experience and cement their market position.

By Dorian Selz, CEO, Squirro and Konrad Niggli, Partner, Synpulse

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