Finance in Focus: Rethinking insurance with cognitive approaches, part 2
The topic of cognitive computing has only been a big topic in the mainstream media for about five years, beginning when IBM launched supercomputer IBM Watson. Watson combined artificial intelligence (AI) and an understanding of natural language to win a contest on an episode of Jeopardy! when playing against the game show’s two best contestants in the history of the show. Next, IBM sent Watson to medical school to study genomics and oncology to help doctors improve diagnoses and help their patient’s healthcare needs. The focus of cognitive computing is now slowly shifting to the insurance industry.
As we learn from the recently published IBM Institute for Business Value (IBV) report, Rethinking insurance: How cognitive computing enhances engagement and efficiency, insurers are looking for better ways to improve operational efficiency and to get closer to their customers. The insurance business is at an inflection point with economic pressures, higher levels of complexity, more empowered consumers and an increase in data: structured and unstructured, internal and external, and real time and historical. IBV researchers engaged with more than 1,500 insurance executives worldwide, and from the results we learn how cognitive technologies can improve the way insurers do business.
The insurance industry is often criticized for its lack of innovation. Some say insurance companies haven’t really innovated during the past 50 years. For various reasons the insurance business has escaped the disruption we’ve come to expect in other industries. But if you look closely, you’ll see innovative uses of technologies that are starting micro-disruptions across the insurance industry:
Cognitive technologies apply across all parts of the insurance value chain:
- Automation of claim handling
- Complaint management
- Counterfraud management
- Marketing and product development
- Policy administration
- Policyholder acquisition
Embellishing the insurance value chain
Cognitive technology can find data in the most challenging places such as contracts and legal clauses, and it is expected to really transform the way insurers work. Cognitive systems are also expected to help reduce the growing gaps in skill areas for underwriting and actuaries. Like medical journals and literature in the medical field, Watson can ingest all policy books and regulations, and by continually learning it can become the best insurance agent and assist new or less-skilled employees.
Data from the study shows that 38 percent of respondents have embraced cognitive computing already. As stated in this IBV report, this proportion is higher than the proportion of respondents in a similar study for the banking industry. The number of use cases being addressed by cognitive systems in the world of insurance is rapidly increasing. Because cognitive computing applies to all parts of the insurance value chain, you can literally pick any part of your value chain to get started today. IBM can collaborate with you to bring together business insight, advanced research and technology to give you a distinct advantage in today’s rapidly changing environment.
Christian Bieck is the global insurance leader for the IBM Institute for Business Value. Bieck is an economist by training, and he worked in various roles in the insurance industry in Europe before joining IBM as a process consultant and researcher. Bieck is a frequent speaker on thought leadership and innovation at insurance events and workshops and has authored various papers on insurance trends and implications, both for the IBM Institute for Business Value and international insurance industry publications. Reach Christian at firstname.lastname@example.org.
Noel Garry spent 30 years in the insurance business before joining IBM as insurance analytics leader. Noel works with an elite team of experts bringing the power of cognitive computing to the insurance industry. Follow Noel on Twitter.
Learn how insurers outperforming their competition are transforming their business with cognitive computing. And then see how to unlock the data in your organization by using IBM solutions built with analytics and cognitive technology for deeper customer insights, streamlined producer operations and preventing insurance claims fraud. And don’t miss other episodes in this podcast series.