If you compiled a list of which industries made the most progressive use of innovative technologies, it is fair to say that few people would include Commercial Insurance on that list. Insurance overall and the Commercial Insurance sub-section are mostly perceived as conservative and reluctant to change.
In 2019 however, that is slowly but surely starting to change. Insurance companies of all types, locations, and sizes are facing a new commercial reality – adapt to new market forces or face the consequences.
An Accenture report from January 2019 – Digital Transformation is Remaking Insurance – revealed that almost half of insurance executives expect AI-based technologies to have the most impact on their industry within the next three years. I would agree that Artificial Intelligence (AI) can have a significant and tangible impact for commercial insurers, but would suggest that Augmented Intelligence can be even more effective.
At Squirro we have just written and released a new white paper that addresses that very subject. Created in partnership with Accenture, we explore how Augmented Intelligence can go even further than AI and can transform Commercial Insurance.
Augmented Intelligence > Artificial Intelligence
The impact of AI over the past few years has been enormous. Not so long ago it was a technology that was struggling to justify the hype and press attention that surrounded it. But as organizations have become more alert to its potential, so its take up has increased significantly.
A recent Gartner report predicted the future of AI, highlighting how adoption has tripled over the past year. It also warned that many AI initiatives have a high probability of failure due to ‘misalignment with business requirements and lack of agility’.
This is where Augmented Intelligence can have even more impact than AI. Not only does it operate by combining computing power and machine learning with human intelligence and imagination, but it is also frequently used to address specific business challenges.
That’s why at Squirro we have recently launched our new Squirro for Insurance suite of applications. One of those applications is the Squirro Commercial Insurance Application. This can overhaul dated and inefficient underwriting processes, while also allowing commercial insurers to adopt a much more pro-active approach to lead generation.
Commercial Insurance Challenges
For those that work in Commercial Insurance, it is clear that the industry is ripe for transformation, having followed many of the same processes for generations. Some of the key challenges facing the sector include:
A lack of digitalization – given the ubiquity of digital platforms and services in so many areas of modern life, Commercial Insurance is conspicuous in its lack of them. People expect such services now, with interactions that are quick and easy, and they expect their service providers to understand their needs.
Inefficient underwriting – this is one of the most time-intensive parts of Commercial Insurance and a major drain on resources for many commercial insurers. It’s always been a mostly manual job, with underwriters spending hour after hour gathering information on the level of risk. Is there now a more efficient way of approaching this task?
Over-dependence on brokers – while there will almost certainly always be a strong role for brokers within insurance, it is also true that many commercial insurers are over-dependent on brokers for lead generation. Broker fees can also be expensive, so there is a powerful case for commercial insurers to be more proactive with new business and engage directly with customers and prospects.
This is a trend already noted by Accenture. In its 2016 report, The Broker of the Future: Winning in a Disruptive Environment, it stated that insurers connecting directly with customers could erode broking revenues from midsized and large customers by up to 20 percent by 2020.
Augmented Intelligence and the Transformation of Commercial Insurance
Commercial Insurance is an industry that is both ready for, and in urgent need of, change. Executives at Commercial Insurance firms of all sizes know that their business model has to evolve, and they also know that digitalization is critical in enabling that change.
By applying Augmented Intelligence applications to some of the specific challenges it is facing, Commercial Insurance can become an industry transformed. The computing power within Augmented Intelligence means that it can extract deep insight from unstructured data including premium data sources, call transcripts, news alerts, CRM content and much more – insight that can be used to tangible effect.
Amazing and delighting customers – Augmented Intelligence applications deliver a full understanding of the Commercial Insurance market and what customers might want. This means that providers can offer the best product to those customers at precisely the right time and at the right price.
This provides the customer with exactly what they need, improving customer satisfaction, loyalty and ultimately the bottom line. It can even open up new revenue streams. With so much data available from connected devices and the IoT, commercial insurers can now offer additional and related services – value-adds that amaze and delight customers even further.
Becoming pro-active in lead generation – knowing what customers need and what is going on in their specific market enables commercial insurers to adopt a much more pro-active approach to lead generation. Instead of sitting passively and waiting for leads to be presented to it by broker partners, a Commercial Insurance firm can use its own data to generate its own leads.
The Squirro Commerical Insurance Application can identify a wide range of catalysts or event that could trigger a need for commercial insurance. Not only does this generate new revenues streams and gives the commercial insurer more control with lead generation, but in doing so can also reduce the commission fee paid to brokers.
Automation of underwriting – given what a drain on resource manual underwriting is for commercial insurers, the ability for Augmented Intelligence to address this is one of the biggest and impactful benefits it can offer.
Such use of automation to trawl through different data sources, enables much more accurate risk assessment and pricing, as it can also connect enormous volumes of historical data with current policy information. This saves time and resource for the commercial insurer but also provides a quicker and more efficient service to customers.
Commercial Insurance is an industry facing many challenges, but via the use of Augmented Intelligence, it can address many of these, transforming itself in the process.
To read about this in more detail, our new white paper written with Accenture can be downloaded here.