Insurance IT Archives - Everest Group

Insurers and AI InsurTech Partnerships | Sherpas in Blue Shirts

July 19, 2018

Insurers are increasingly investing in AI to enhance the customer experience with automated personalized services, faster claims handling, and individual risk-based underwriting processes by empowering agents, brokers, and employees. Our recently released Insurance IT Services Annual Report 2018 found that more than half of insurers are opting to build in-house AI capabilities through hiring, internal training, hackathons, acquisitions, and partnerships with InsurTech companies, while the rest are turning to IT service providers.

Increased InsurTech Investments

The appetite for change within the insurance industry is certainly there. To make that change happen quickly, insurers have been investing in InsurTechs, firms offering technology innovations designed to squeeze out savings and efficiency from the current insurance industry model, to align data and integrate backend systems. Total InsurTech funding reached US$2.3 billion in 2017, a 36 percent increase from the US$1.7 billion recorded in 2016. In 2016, AI and IoT accounted for almost half of the total investment in InsurTech startups globally.

AI InsurTech investment has increased multi-fold since 2016. Seeking access to talent pools, innovative ideas, high speed, and lower cost of innovation, leading insurers have invested in startups including Betterview, Captricity, CognitiveScale, Lemonade, Mnubo, and Uniphore.

And 2018 appears to be spurring even more investments. Indeed, some of the top insurers have created dedicated venture capital arms – e.g., Allianz Corporate Ventures, MetLife Digital Venture, and XL Innovate – to invest in technologies such as voice biometrics, cognitive virtual assistants, speech analytics, telematics, drone imagery, and machine learning.

Strategic Decisions

Research we conducted on 24 leading insurance firms’ investment model suggested that more than 70 percent of their investments in AI InsurTechs are not just from a funding perspective. Rather, they are entering into partnerships with the InsurTechs as a more strategic decision to fulfill their long-term vision of digitalization.

Significant Impact across Insurers’ Value Chain

Process optimization: The majority of the AI InsurTech investments are for automating underwriting policy administration and policy administration, resulting in increased process efficiency. For instance, AXA partnered with TensorFlow to use machine learning to optimize pricing
Product innovation: In addition to fixing processes, insurance companies are partnering with InsurTechs to develop new customized policies and pricing, per user demand through usage-based information. For example, in 2018, Munich Re’s HSB Ventures led a US$16.5 million venture financing for Mnubo, an IoT, data analytics, and AI startup, to build tailored financial solutions to improve the company’s business and facilitate new business models
Customer experience: AI is making traditional claims processing a thing of the past. Companies are pioneering new cognitive solutions that are making the claims process faster, smarter, and more efficient. For instance, in 2018, GENERALI implemented Expert System’s Cogito® technology to focus on registration and claims processing, and to automate the customer email classification, resulting in a swift and smooth claims process and better customer service.

We believe these partnerships create a win-win situation. They give insurers access to the necessary talent pool, latest technology, innovation, and speed they need to thrive, not just survive. And they provide vital to insurers’ ability to compete, and provide InsurTechs with the guidance, infrastructure, funding, and customer base they need to grow.

If you’d like insights on leading InsurTechs and how they’re changing the insurance industry, please feel free to reach out to [email protected] and [email protected].

AI projects in Insurance are Moving from Pilots to Business Programs | Sherpas in Blue Shirts

May 4, 2018

Insurers are rethinking their business ethos to become protectors instead of payers. The insurer of the future is aiming to develop a customer-centric value proposition. Carriers are looking at developing innovative products that are contextualized to meet evolving customer needs. And the insurance distribution strategy is shifting to adapt to new product offerings, client needs, and digital technology-led disruption in the ecosystem.

Not surprisingly, insurers are adopting AI and related technologies to drive these capabilities. According to our just released Insurance IT Services – Annual Report, the top three business objectives insurers are trying to achieve with AI projects are customer experience, process optimization, and product innovation.

AI Trends in the Insurance Industry

Our annual report studied 80 unique AI initiatives by global insurers to unearth AI trends in the insurance industry. Here are the top ones we identified.

Capabilities

Approximately 53 percent of insurers are developing in-house capabilities for their AI initiatives. But many have large skills gaps that will inhibit their ability to scale pilot projects and realize the expected value from AI initiatives.

Embedded intelligence

Insurers have accelerated their focus on embedding intelligence across the value chain, with higher adoption of AI for sales & distribution and underwriting processes.

Self-service

Insurers are adopting intelligent self-service AI tools to enhance the customer experience.

Mid- and back-office process value

The value delivered through front-office AI initiatives such as chatbots is limited. But real value can be unlocked when AI is applied to optimize mid- and back-office processes such as agent support and claims management.

Data

While structured enterprise data remains the major source of data for insurers (52 percent, per our research), the connected ecosystem – i.e., data from IoT-based devices – is gradually gaining traction, at approximately 35 percent. As insurers evolve in their AI journey, deploying AI and machine learning (ML) to leverage unstructured data from third-party sources and connected ecosystems is likely to increase. But as of today, enterprise data silos, legacy systems, and lack of interoperability standards to tap into the connected ecosystem and third-party data are slowing down insurers’ AI initiatives.

Some Standout Examples

Many insurers have made progress in deploying AI and ML to their data and are starting to see quantifiable results. For example:

Zurich Insurance deployed AI in its personal injury claims process. The company claims that AI has helped it save 40,000 work hours, and reduced claim processing time from 58 minutes to five seconds per medical report
ICICI Lombard launched a chatbot called MyRA to underwrite two-wheeler, fire, and burglary insurance for SMEs. Since its launch, MyRA has been engaged in 65,000 customer interactions, and has sold more than 750 policies without any human intervention.

AI has the potential to deliver significant value to insurers and their customers. To learn more about how it can impact your business, our recent Insurance IT Services – Annual Report is packed with data and our take-away insights from 80 unique insurance firm AI projects. In it, we outline how AI implementation is impacting the insurance industry, and present various AI use cases across the insurance value chain.

Please write to Ronak and Priyanka to discuss how you’re adopting AI in your insurance business processes.

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Tag: Insurance IT