Whitepaper: Transform customer

engagement with intelligent systems

With expert insights from MetLife, LV=, Argo Global and Gjensidige
Whitepaper: Transform customer
engagement with intelligent systems
With expert insights from MetLife, LV=, Argo Global and Gjensidige

With Contributions from:

Zia Zaman Joachim Lund Kenny Holms Pardeep Bassi

CEO Lumen Lab & Chief Head of Data Warehouse Head of Predictive Head of Data Science
Innovation Officer Analytics Technology and Analytics LV=
MetLife Development ArgoGlobal
Gjensidige

Disclaimer Author
Views expressed by our experts represent their sole thoughts on the topic of Insurance Morag Cuddeford Jones
claims automation. They do not necessarily represent the views of their current organisa-
tions and should not be seen as an endorsement of any group, product or strategy.
Editor
The information and opinions in this document were prepared by Insurance Nexus and its
partners. Insurance Nexus has no obligation to tell you when opinions or information in Helen Raff
this document change. Insurance Nexus makes every effort to use reliable, comprehensive Head of Content
information, but we make no representation that it is accurate or complete. In no event shall Insurance Nexus
Insurance Nexus and its partners be liable for any damages, losses, expenses, loss of data, and helen.raff@insurancenexus.com
loss of opportunity or profit caused by the use of the material or contents of this document.

No part of this document may be distributed, resold, copied or adapted without

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 Whitepaper: Transform customer
engagement with intelligent systems

Artificial Intelligence (AI) is widely tipped to transform the insurance industry as we

know it. In a recent survey of senior-level insurance executives, over 75% agreed
that it will either significantly alter or completely transform the overall insurance
industry in the next three years1. But if the sector is to get the best out of this new
capability, it’s going to have to look beyond the hype.

The first thing to realise is that by and large industry conversations around AI aren’t
really talking about artificial intelligence at all. Most technology and data-focused
executives agree that applying true AI is still some way off.

What most are referring to is an amorphous collection of technologies that are able
to manipulate data in a faster and more adaptable way than ever before.

“[AI] has become a colloquialized term encompassing a lot of hot topics around
technology and analytics. In my team, we focus on building models that predict
what’s going to happen next, bridging traditional statistics and machine learn-
ing techniques. These efforts are really a subset of AI, which is broader in scope,”
explains Kenny Holms, Head of Predictive Analytics, Argo Group.

“People are using the term AI unnecessarily,” adds MetLife’s Chief Innovation
Officer for Asia, Zia Zaman. “We like to use the term intelligence everywhere
which includes elements of rule-based data processing.” He also suggests that by
removing the word ‘artificial’ you allow the human element back into the process,
positioning the technology as a way to augment humans.

Joachim Lund, Head of Data Warehouse and Analytics of Gjensidige, suggests

leaving it at a very simple definition that allows for today’s use of AI by the insur-
ance industry: “It’s about using machine learning to help automate processes.”

This paper will use AI as a convenient shorthand to refer to these automated and
intelligent technologies.

A tool for getting under the skin of the customer

The most significant contribution AI has made to the insurance industry thus far
has been to be able to sift through the terabytes of customer data to find fresh
insights on their needs.

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“If you can examine the customer’s goals, the journey they take with you, you will
see there are moments of opportunity to reduce friction. Customers want brands
that know them, know their context and can use the inputs to deliver unique
experiences,” Zaman explains.
Its advantage is in overlaying contextual data to respond to needs the customer
might not even realise they had. In one example2 suggested by an AI technology
vendor, vehicle insurers could use weather data, overlaid on addresses held in the
CRM platform to trigger personalised warnings in the event of hail. Get your car
inside would be the message.

http://events.insurancenexus.com/ 1  https://newsroom.accenture.com/news/artificial-intelligence-set-to-transform-insurance-industry-but-integra-
insuranceanalyticseu/ tion-challenges-remain-according-to-accenture-report.htm
2  https://www.salesforce.com/uk/blog/2017/06/the-financial-services-loyalty-crisis-is-ai-the-answer.html

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 Whitepaper: Transform customer
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The AI system could then go one step further. By having ‘learned’ which channel
the policyholder tends to regularly check messages in, the system can trigger alerts
to favour that channel. The personalisation could go a step further too, from get
your vehicle inside, to get your Vespa inside.

Personalisation is just one piece of the puzzle. It is clear from speaking to execu-
tives that the customer’s overarching requirement from their insurer is speed. What
the customer determines is a satisfyingly fast and seamless process is a question of
individual taste but it’s also something AI can help guide the insurer to deliver.

Speed is relevant across the customer journey - customers want fast quotes
and fast coverage but they also want speedy claims resolution. According to JD
Power3, the claims cycle time is a leading indicator of customer satisfaction and
that the best claim cycle was an average of 11 days. To achieve this insurers need to
manage a huge range of processes while also integrating the ever-increasing flow
of data.

One executive reported that using algorithms to perform administrative tasks was
15 times faster than standard procedures while another stated that humans simply
couldn’t be expected to process the four terabytes of data a day created by driver-
less cars. 4

It’s clearly still a work in progress, as Lund reveals: “Most customers were still calling
us despite the online claims notification process. We thought it was because
they preferred the human touch. In fact they were calling us to find out how they
should go about notifying a claim online.”

AI doesn’t just help personalise quotes and communications and deliver them at
speed, it learns how to make the customer’s interactions with the insurer better
and less frustrating.

Pardeep Bassi, Head of Data Science at LV adds: “Whenever the customer interacts
with us (such as at the point of claim) is an obvious place to make use of AI. AI can
be used to make efficiencies in the claims process and provide an improved experi-
ence to the customer.”

One interesting revelation Bassi found through AI systems was in fraud discov-
ery. Responsible for around $80bn in lost revenues to insurers in the US annually,
Insurance AI & Analytics catching fraud isn’t just a benefit to the insurer, ultimately a fraud-efficient insurer is
Europe Summit better able to engage its customers. According to VentureBeat, fewer than 30% of
October 9-10, 2017 insurance customers globally report having positive customer experiences.

Drive operational effectiveness, greater Tools such as AI Approval from fintech Tractable5 are already available to insurers
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Europe’s only AI conference 3  http://guidingmetrics.com/content/insurance-industrys-18-most-critical-metrics/

4  https://www.ft.com/content/e07cee0c-3949-11e7-821a-6027b8a20f23?mhq5j=e3
dedicated to insurance 5  https://www.finextra.com/pressarticle/69305/ageas-to-use-ai-for-claims-handling?utm_source=Triggermail&utm_
medium=email&utm_campaign=Post%20Blast%20%28bii-fintech%29:%20More%20regulatory%20confusion%20
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4
 Whitepaper: Transform customer
engagement with intelligent systems

involved in accidents to determine if the claim is genuine, a process that would

normally be carried out by an engineer.

As an assessment is made in seconds, repair estimates can be reviewed and autho-

rised while flagging up suspicious claims. The customer tends to view the process
as fairer and as they also tend to get their vehicle back faster than in a traditional
claims and repair process, superior.

In a similar vein, Lund’s latest project is around automated photo recognition,

using photos to replace the processes previously done by humans. “The customer
takes a picture, a single image of the damaged car, and our goal is that it should be
enough for the customer to press send and then everything is taken care of.”

The project has been in place for a year and aims to exceed the current rate of
human accuracy in damage assessment which stands at around 80%. “We think the
machine will be better - in time.”

Even the most seemingly insignificant details during a claim can be revelatory: “You
can monitor if someone is left or right-handed when they are interacting with the
website,” Bassi reveals, meaning that if that suddenly changes in the middle of a
process, the interaction begins to look less than genuine.

Reducing the time spent examining claims for potential fraud is just one way of
building speed back into the claims process and one for which AI is eminently
useful. Identifying patterns in large volumes of data in real time brings insurers ever
closer to the ‘one and done’ immediate claims settlement that appears to be the
goal.

“There is the well-known Lemonade example of the fully automated, immediate

claim settlement process but that’s still a way off for most insurers because of
the complexity of the process. But the industry is heading in this direction,” Bassi
suggests.

“Machine learning or intelligence everywhere has the potential to make customer

interactions frictionless, getting rid of documents and streamlining processes. We
can reduce waste through more claims accuracy and make the call centres more
efficient. Individual risk profiling will emerge. There is a virtuous cycle where you
begin to know more and more about the individuals and can deliver the right
Insurance AI & Analytics product to the right customer,” Zaman concludes.
Europe Summit
October 9-10, 2017 Automating the human out of the picture?

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The upsides of using AI in the back end are clear but when it comes to customer/
insurer interactions is it possible to quite literally remove the middleman?
In an often emotive subject like insurance there is an understandable reticence
to replace the human touch. The nuances and access to insight and empathy are
still very much the preserve of skilled executives. And as we discovered at the start
of this paper, most AI tools are considerably less intelligent than the hype would
suggest.

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 Whitepaper: Transform customer
engagement with intelligent systems

However, there are signs that AI is beginning to make moves towards the insur-
ance front line. In fact, some have been around for a surprisingly long time. Hanna6
is one such automated service assistant that has worked for the Swedish Social
Insurance Agency since 2003. Allie is Allianz’s always-on online assistant, Magda
works for Link4 in Poland and Arbie belongs to RBC Insurance in Canada, not to
mention the alter ego of real life chief claims officer at Lemonade, Jim Hageman,
imaginatively named - Jim.

“We are partnering in two of our markets Flamingo, an Australian insuretec whose
AI-powered personal virtual sales assistant uses web chat and web forms to
guide the customer through the quote process. We like it because the interaction
is personalised and requires Rosie, the avatar, to work within the existing sales
process,” Zaman reveals of the exploration MetLife Asia is making into the world of
chatbots and roboadvisors.

While it may take a while for chatbots to build intelligent decisioning rather than
being a more sophisticated search engine, executives are confident that they will
bring benefits both for customers and insurers.

“As they start to use more unstructured data, chatbots will begin to penetrate
much more which may potentially lead to cost savings,” Bassi claims, however he
goes on to warn: Completely replacing human interaction could potentially restrict
your customer base as certain segments of customers are used to and expect
some level of human interaction.”

Lund also recognises that chatbots have their limitations, particularly in the claims
environment: “You have to think about what you know about customers from your
CRM system and also look at the accident. In some cases it’s a stressful situation
and we shouldn’t turn the automated process on. Instead, the customer needs to
be steered straight to a call centre.”

He warns that you can’t use algorithms to define who should talk to a human
versus who will prefer to go through an automated channel. “We cannot have
models that are so precise.” Essentially it comes down to choice: “The customer has
the possibility to change the process at any point in the journey.”

MetLife Asia’s Zaman believes that speech will be the next frontier when it comes
to automated, AI-driven customer service. In India, the insurer is partnering with
Insurance AI & Analytics Uniphore and Imaginate to provide an experience called ConVRse. A virtual reality
Europe Summit headset gives the customer access to a service avatar that the individual can use to
October 9-10, 2017 answer questions. The avatar is staffed by a real live customer service agent.

Drive operational effectiveness, greater
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“In the past, customer agents would have to deal with frustrated customers. With
VR, you give customers control and the chance to speak with us in a real human
voice. It allows them to be a protagonist in their own financial journey. They love
the experience and it shows with a 97% satisfaction metric Net Promoter Score
from our India-based trials,” Zaman says.
AI has a clear pathway in personal lines but has yet to make waves commercially in
specialist markets, according to Holms. “Most personal lines insurance companies
6  https://www.the-digital-insurer.com/blog/insurtech-the-rise-of-the-automated-insurance-agent-aka-the-in-
surtech-chatbot/

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 Whitepaper: Transform customer
engagement with intelligent systems

have a long history of thinking about the customer experience. At Argo, we have
been applying that kind of thinking to streamline the small to midsized commercial
market - digitising what was previously a very human workflow. Due to the special-
ist nature of a lot of our risks, human interaction and expertise are still needed in
many cases - so when the customer doesn’t fit in a ‘standard’ box, they can still talk
to a representative for advice or to tailor their product.”

From product delivery to product creations - new avenues with AI

The immediacy of AI systems’ ability to trawl massive amounts of data to respond

to customer queries quickly and accurately is the technology’s most immediately
accessible use case for insurers today. However, using it to identify and manage
product development and variation is increasingly of interest.

“We have a lot of ideas about where we can take this but none has become a
physical product yet,” Lund admits. “Data is the main challenge because we need to
be really good at machine learning. You need enormous amounts of data.”

If creating brand new products out of the blue remains a distant concept, how to
amend or simplify existing insurance to better meet customer needs in Asia is a
critical focus for MetLife’s Zaman.

“The legal contracts called insurance policies are just a bunch of nested ‘if’ state-
ments. If you can codify those then you can create smart contracts. What if you
just had a simpler product, with a simple, fixed benefit. We are experimenting with
micromoment models.

“At various points in the customer’s life they may have a ‘hot’ state - thinking about
risk or doing something where they might want cover. In the moment, they need
to buy it. This could include models such as pre-pay phone credit with insurance,
or baby formula already covered by a small insurance. We’re already seeing this in
emerging markets. If you automate that and keep the rules simple, it keeps the
insurance simple.”

Insurance AI & Analytics
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“People like to think that they are being treated fairly,” adds Holms. “In the car
market there is already the black box, which can provide a fairer premium based
on the insured’s driving habits. It’s about having a closer connection with the
customer.”
One example of micromoment7 insurance comes from insuretech provider,
Neosurance. It allows insurers to sell limited time insurance cover via push notifi-
cations to the user’s smartphone. The AI system identfies the potential insurance
need and is activated with only four touches of the screen.
AI linked to sensor data is another area exciting insurers for its personalisation
potential. Holms says: “Live data feeds give us up to date information on the
customer. Before, we had to rely on the customer faithfully reporting data. It allows
for more appropriate pricing for one.”

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insuranceanalyticseu/ 7  https://insurtechnews.com/insight/tllt-ventures-insurtech-ai-report-celebrates-disruptive-innovation.html

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 Whitepaper: Transform customer
engagement with intelligent systems

Of course, we already see this as fairly mainstream in the automotive telematics

sector but with the take up of home assistants such as Amazon’s Echo and Google
Home, plus any number of wearables and internet of things (IoT) sensors, there is
now a wealth of information with which to personalise.

It’s not just about creating personalised policies. It’s also about demonstrating that
the insurer is a partner as well as provider. This is beginning to bleed into personal
lines but is of course more entrenched in the commercial area.

“Take a grocery store for example. The ultimate aim is to change the dynamic of
the relationship so the insured thinks of themselves as our partner. We can relay
information to them about their risk profile which can help them better manage
risks and insurance spend. The use of wearables or sensors in managing perishables
in-store for example, or detecting the potential for trips and slips. Automating that
data flow has huge value for both the insurer and the insured,” Holms explains.

Insurers do have to make sure that they don’t disappear down a funnel that
ends up delivering smaller and smaller incremental gains. While without physical
manufacturing costs for the most part, product development, distribution and
management is a significant business cost, as is data management. Is it really
worthwhile splitting the customer base into infinitely small variations in the inter-
ests of personalisation, just because we can?

“We are all unique. If a brand knows ten thousand things and tracks ten thousand
propensity variables about you, the chances of being the same as someone else
go down to nil. It’s like a snowflake theory of marketing; if I make one little tweak
to my product that gives you something super important to you, that is a good
example of mass customization,” Zaman says.

Zaman goes on to say that there should be no difference in personalised insurance

product delivery than there is in a customised website experience:

“On a leading ecommerce site, I’m being delivered a different experience today
than last Thursday but there is no additional cost. It comes back to the ability to put
intelligence everywhere. You can only get scale if you can figure out a smart way to
deliver it.”

Bringing AI into the insurance culture

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It’s hard to deny the intellectual arguments behind implementing AI. As long as it’s
possible to look beyond the hype and accept the sector’s capabilities for what they
really are, machine learning and analytics have the potential to deliver new product
streams, cost savings and improved customer engagement across the board.
That said, acceptance is not universal and some real barriers to adoption remain,
both physical and cultural. The 75% of executives in our introduction who believed
AI would transform insurance were surveyed by Accenture.
The same report suggested that a third believed their own company would be
completely transformed by AI. This involves moving beyond insurers’ tendency to
look in-house for development and inspiration. The vast majority (94%) said that

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 Whitepaper: Transform customer
engagement with intelligent systems

it would be critical to adopt a platform based model while 76% knew that their
competitive advantage would be influenced by the strengths of their partners and
ecosystems.

“The biggest challenge is that ultimately we’re talking about using machines to
make decisions which have traditionally been made by humans, reducing and
even replacing the need for people,” warns Bassi.

Holms adds: “Depending on the market you’ll meet different levels of resistance
towards automation. Some of this resistance is driven by the specialist nature of the
business but sometimes it’s just that people don’t like change. It can be a lot easier
to demonstrate the value of automation, standardisation and analytics whena
company has a large body of data and similar risks. We typically need to work a bit
harder to gain confidence and buy in due to our diverse and specialist risk base.”

While the conversation around plug and play technology has been around for
some time, the changing nature of who and what will be needed in the insurer
workplace is changing the face of the insurer’s human capital. The Accenture
research found that 54% of respondent organisations planned to increase their
freelance workforce from anything between a quarter to a full 100%.

“Culture is a big challenge. Technology will never replace all human decision-mak-
ing,” Bassi adds and Lund expands: “It’s not about who has the best technology in
place. It’s about combining technology with our own innovation in the industry,
our own processes. We need to move the knowledge we have already in the
company’s workforce into those machines and algorithms so they work together.”

However insurers plan to integrate AI there is a wealth of evidence pointing to a

need to move quickly. Insuretech news reported8 that $1.35bn has been invested
into startups focused on AI in the last five years. This growth is expected to
continue exponentially.

Within this investment, a third of the ten largest are in claims management,
yet more proof that the ‘moment of truth’ of claims has in fact become both an
indicator and creator of insurer health. Referred to as the area where ‘AI is likely to
outperform a human’, investment in claims is currently pegged at $81m.

Insurance AI & Analytics
Europe Summit
October 9-10, 2017
Drive operational effectiveness, greater
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Automation.
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But, as ArgoGlobal’s Holms warns: “Much of the value still has to be demonstrated,
by taking ideas off the white board and putting them into practice.” These stagger-
ing sums are being invested because there is already significant evidence that
an AI approach to engaging customers is already delivering returns for insurers.
The Innovation in Insurance report9 from the Institute of International Finance
summarises multiple examples of how AI-backed technologies are delivering vastly
superior customer experience to traditional models.
In the already well-established telematics market, companies like Metromile has
saved low-mileage customers an average of $500 a year compared to traditional
insurers. The startup analyses the drivers’ mileage in real time.

http://events.insurancenexus.com/ 8  https://insurtechnews.com/insight/tllt-ventures-insurtech-ai-report-celebrates-disruptive-innovation.html
insuranceanalyticseu/ 9  https://www.iif.com/system/files/32370132_insurance_innovation_report_2016.pdf

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 Whitepaper: Transform customer
engagement with intelligent systems

Contact Us: Trov makes use of AI-type systems to provide micromoment insurances, managing
users’ portfolio of insurances - weekend bike coverage for example - using photo
cataloguing, a smartphone and text message notifications.

PrecisionHawk allowed Munich Re to respond to the 2016 Ecuadorean earth-

quake in record time, capturing the damage via drone and having it analyzed by
DataMapper to allow for faster claims processing and payment.

“At MetLife, artificial intelligence or ‘intelligence everywhere’ is baked into the

company’s broader digital strategy and we are approaching that strategy across
Helen Raff three horizons: Horizon one is where we can bring incremental gains in customer
engagement around automation and digitisation. It is where, as insurers, we
Head of Content become more helpful than we were before. Horizon two is creating differentiation
Insurance Nexus - where we can serve customers better than anyone else. True disruption will be
T: +44 (0) 207 375 7582  horizon three - where we can change the experience altogether,” Zaman concludes.
E: helen.raff@insurancenexus.com

Insurance AI & Analytics

Europe Summit
October 9-10, 2017

Drive operational effectiveness, greater

profitability and improved customer
loyalty via Advanced Analytics, AI and
Automation.

Europe’s only AI conference

dedicated to insurance

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insuranceanalyticseu/

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Insurance AI & Analytics Europe Summit
October 9-10, 2017

Advanced Analytics, AI and Automation:

Drive operational effectiveness, greater
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300+ attendees 15+ countries
30+ insurance 5 workshops
from analytics, represented –
speakers for each core
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An agenda designed to tackle the biggest challenges

and opportunities in AI and analytics:
■■ Drive operational transformation: Reduce turn-around times, lower costs and improve
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get buy-in from your workforce and develop agile, proof of concept models
■■ Enhance the customer experience using chatbots and roboadvisors, and put contextual,
personalised products in front of your customers in front of your customer to boost loyalty
■■ Explore new tools and techniques to optimise price in real-time at the point of sale, boost
profitability and sharpen your competitive edge
■■ Get practical examples of using machine learning to automate the claims process; use
images, sensor data and historical data to assess severity and predict repair costs

With 30+ speakers from Europe’s biggest insurance companies, including:

Go here to download the brochure with full information:

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