The very nature of innovation is rapid change. Combined with market demands and supported by an environment fertile for change, the path is paved for disruptive technologies. The past 75 years have seen six waves of technology innovation, beginning with the era of mainframes back in the 60’s, followed by the advent of personal computers. Client server computing represented the third wave, followed by the introduction of enterprise systems. Subsequently, the medium that connects us all, the ‘Internet’, became a reality at the turn of the century. The fifth wave came in the form of enterprise computing followed by an evolution towards a mobile lifestyle with the introduction of the smartphone. We are now on the verge of a sixth wave: cognitive computing.
The Sixth Wave: Cognitive Computing
In 2011 IBM’s revolutionary computer, Watson, defeated two humans in the game Jeopardy to mark the arrival of the sixth wave of technological innovation, cognitive computing. Thus began an era of self-learning systems able to simulate human thought processes.
Cognitive computing, simply stated, is the simulation of human thought process in a computerized model. Think of it as a computer that understands your natural language and applies machine-learning techniques to analyze the context of your conversation to predict outcomes with the power of data mining.
2013 marked the shift of cognitive computing from idea to commercialization with the debut of an application developed to aid management decisions at a Memorial Sloan Kettering Cancer Center in New York. Today, cognitive giants like IBM’s Watson, Google’s DeepMind and SalesForce’s newly acquired MetaMind are focused on discovering synergies from the integration of deep machine learning and data analysis.
So what impact can the advent of cognitive computing have on the Insurance industry? Historically, the insurance industry has been complex and intimidating to consumers. With rapid digitization, rising consumer expectations and changing demographics, the insurance sector is under pressure to better serve customers or lose them to competitors.
In a recent IBM Institute for Business Value survey, 41 percent of respondents stated that they left insurers who were too slow to react to their changing needs.
At the same time, insurance companies must maintain security in an era beset by fraud and find a way to leverage vast the amounts of data at their disposal to optimize operations.
Opportunities to Apply Cognitive Computing in the Insurance Industry
Not surprisingly, progressive executives in the insurance industry are turning to cognitive computing as the new weapon in their competitive arsenal.
Cognitive computing has revolutionized how consumers research and buy insurance and in turn how insurers determine underwriting costs and settle claims. For example:
- Client Engagement: Virtual agents have the power to help customers understand potential risks and recommends appropriate policy coverage based on customers’ financial profiles.
- Insurance Agents and Access to Information: Leading insurance companies are utilizing the analytical power of IBM Watson’s Data Explorer to generate a single unified profile view of their consumers, intelligently aiding agents on their customer calls.
- Underwriting Assistance: A Swiss reinsurance company is utilizing cognitive computing to provide the data its underwriters require to make informed decisions and accurately price risk.
- Claims: In collaboration with Watson for Analytics, RIMAC Seguros, a Peruvian insurance company, uses cognitive computing to reduce claims processing time by 90 percent. The company is exploring other ways to use cognitive computing to further improve processes.
- Call Center Automation: Cognitive computing enables call center service representatives to access comprehensive customer information, develop deep insights and resolve customer issues more quickly and efficiently.
Evidence demonstrates that not only consumers but also key decision makers in middle and upper management at insurance companies are ‘digital natives’ who presume they will be able to use smartphones and tablets in many aspects of their personal and business life, including shopping. In fact, a study by the IBM Institute for Business Value suggests that insurance industry executives may rank mobile technology and cognitive computing as more strategically important than their peers in other industries.
Virtual Assistants Powered by Cognitive Computing
The insurance industry’s interest in leveraging cognitive computing and the use of mobile technologies has fueled innovations in the field of virtual agents.
Virtual agents can enhance the end-to-end customer journey with the insurance company, and act as personal risk advisors for customers concerned with ensuring their financial future. These agents “understand” customer needs and as a result can help develop a personally tailored financial plans. This is the power of cognitive computing in today’s world.
Improving Customer Acquisition & Account Management
A cognitive engagement model can be extended broadly to two areas of implementation:
- Customer acquisition: Cognitive computing makes it possible to provide a seamless end-to-end customer experience to today’s digital native consumer through a platform that simplifies the potentially intimidating traditional insurance process through a set of progressive steps. With minimal service or account management intervention required, these solutions prove to be cost-effective for the carrier, with reduced deployment costs.
- Independent agent network: Solutions can also be integrated with an insurer’s CRM platform to augment the data and analytics intelligence available to agents. This provides agents with new customer insight, facilitating a superior managed customer interaction and a more efficient lead generation process. They minimize the time spent per customer, resulting in reduced costs for the insurer. From a customer’s standpoint, they provide improved insight on their specific situation, reducing the number of questions they might have or steps they might have to compete, simplifying and streamlining the process for consumer and the insurer.
Cognitive computing makes possible the development of cost-effective solutions that simplify and optimize workflow processes and maximize efficiency. Solutions improve the customer acquisition process for carriers and provide a seamless experience for consumers who want to better understand their insurance and financial service needs. Virtual agent engagement is the future of how consumers will shop for insurance and can offer a “channel-less” experience—such as integrating with Amazon’s Alexa—allowing consumers to engage with carriers whenever and wherever they need.