May 17, 2020

David Sexton of Cognizant on the imperative for AI adoption in the insurance industry

Machine Learning
natural language processing
AI
David Sexton
4 min
 David Sexton shares with us the need for AI in the insurance industry
David Sexton, VP & Head of Insurance Practice, UK and Ireland, Cognizant.Cognizant is an American multinational corporation that provides IT service...

David Sexton, VP & Head of Insurance Practice, UK and Ireland, Cognizant. Cognizant is an American multinational corporation that provides IT services, including digital, technology, consulting, and operations services. Here David Sexton shares with us the need for AI in the insurance industry.

 

The impact of Artificial Intelligence (AI) is spreading, probably further than many people thought it might. The next industry to be fundamentally transformed by AI is insurance. From product development, underwriting and claims, to customer service chatbots, risk assessments and quotations, technology is being deployed across the sector to provide faster, more accurate services.  What is interesting, however, is that while some major insurance companies are investing aggressively in AI, many are moving slowly, unsure of how best to deploy these technologies.

As Cognizant’s recent AI survey shows, only half of insurance executives consider AI technologies to be ‘extremely’ or ‘very important’ to their company’s success, lower than for any other industry, such as financial services, healthcare and manufacturing. Looking ahead three years, only 36% felt AI would be very important, again lower than any other industry.

This lack of awareness around the importance of AI is worrying as new entrants to the market start making an impression. These insurtechs, a term used to describe new digitally focused entrants in the market that are using technology innovations to increase savings and efficiencies, are using AI capabilities to introduce a new range of innovative products. These include instantly customisable life insurance and on-demand property coverage. Consequently, traditional insurance companies are now facing unexpected competition. It is critical that they pick up the pace when it comes to technology investment and adoption, or face being left behind.

Enhancing the customer experience

Most insurers already using AI technology have focused their investment on customer service projects such as chatbots. This allows them to automatically capture customer information and respond to enquiries. Our research found that the best applications for chatbots in insurance include product management, marketing, underwriting & policy acquisition, policy servicing and claims management. Moreover, the research also found that insurance executives who were familiar with existing AI projects at their companies most often cited ones related to customer service (56%). This is likely because chatbots allow customers to receive personalised product recommendations and quotations almost instantly, giving consumers and business customers the ability to purchase most insurance products online in minutes. For example, the chatbot Amelia is used by insurers such as MetLife to combine machine learning (ML) with natural language processing (NLP) to make decisions based on real-time conversations.

Whilst many may worry about AI taking jobs within the industry, these technologies are actually enhancing many jobs carried out by humans. For example, call-centre representatives can receive information based on data from technology to assess the sentiment and mood of a discussion whilst a call is in progress.

Faster, more accurate underwriting

Across the insurance industry, AI technologies can now also be applied to a wider variety of data sources to improve the accuracy of risk assessments and quotations. For example, these tools can automatically analyse real-time data from security systems or by using drones when underwriting homeowner-insurance applications. Looking to car insurance, AI tools can be used to conduct analyses of telemetry data and provide insight into driving behaviour to inform car insurance quotations, such as how fast the customer drives on average, how quickly they accelerate and whether they drive faster than the speed limit. Zurich Insurance Group, for example, has partnered with the Swedish insurtech, Greater Than, to allow it to analyse a potential customer’s driving data compared to a set of reference profiles created from more than a decade’s worth of collected data, allowing the company to customise and personalise their customers’ premiums based on the individual’s driving behaviour.

Reimagining the claims process

The claims process is just another area in which AI can be applied to automatically audit thousands of open claims when action can still be taken, rather than reviewing of a sample of claims after they have closed. As such, insurers will be able to move beyond the traditional reactive model of paying claims after a loss and be able to adopt a proactive, preventive model of helping customers avoid losses in the first place. For example, commercial property insurers can use the data generated by smart buildings to help their customers reduce the risk of fire or water damage, and the data generated by telematics devices in vehicles can allow car insurers to provide customers with feedback on their driving behaviour.

Now is the time to adopt AI

AI can, and is, revolutionising insurance. It is being used in every function of a business to transform the way organisations operate. As highlighted, established players have two choices – either ramp up their investment to compete with new, disruptive insurtechs, or partner with this innovative competition to access the technology, unencumbered by legacy systems and processes. If they want to compete in a market driven by the customer experience, then getting on board the AI bus is the only way to ensure they do not get left behind.

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Jul 7, 2021

ServiceNow pumps millions into EU service compliance

ServiceNow
Compliance
EU
Schrems II
2 min
ServiceNow
ServiceNow has announced a multimillion euro investment in EU services, providing customers even greater trust, choice, and control over their data

ServiceNow, the digital workflow company, has announced a multimillion euro investment to help EU customers meet compliance requirements.

The legal, technical and organisational safeguards will help companies to comply with the the Schrems II judgment and European Data Protection Board (EDPB) Recommendations issued in June 2021.

ServiceNow’s investment means all EU-hosted data will be exclusively handled within the EU, and the cloud-hosted digital workflow provider claims its solution will come “without impact on current delivery and service”.

ServiceNow upgrade: free of charge

There will be no cost for current customers to opt in to the data compliance solution, even though ServiceNow is investing an unspecified multimillion euro sum and hiring more than 80 new staff across the bloc.

Mark Cockerill, vice president legal, EMEA and global head of privacy at ServiceNow, said: “With any regulation change, cloud services companies have a choice. They can adopt a ‘wait and see’ approach or get proactive and help customers and partners innovate. At ServiceNow we are on the front foot, continually investing in our customers, allowing them to operate with the highest level of choice and control over their EU data.

ServiceNow upgrade: ‘peace of mind’

“Our new EU-centric service delivery model will give our current customers and partners peace of mind. For customers and partners operating in highly regulated industries, or in the public sector, or those that have yet to make the switch to the cloud, this model gives them certainty and simplicity when selecting the cloud service that best suits their needs.”

Carla Arend, lead analyst, cloud in europe for IDC, said, “The Schrems II ruling has led European organizations to revisit their cloud-related data protection policies and processes when it comes to international data transfers through cloud services.

“Contractual, privacy, and security safeguards and the assurance that data will be kept and handled in the EU help European organizations to comply with European data protection laws while taking advantage of global cloud platforms. Vendors, such as ServiceNow, that invest to support their customers in response to this ruling are providing essential choice to their customers.”

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