How the Coronavirus Will Change AI Innovation in Insurance

Daniel Faggella

Daniel Faggella is Head of Research at Emerj. Called upon by the United Nations, World Bank, INTERPOL, and leading enterprises, Daniel is a globally sought-after expert on the competitive strategy implications of AI for business and government leaders.

How the Coronavirus Will Change AI Innovation in Insurance
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The insurance industry is being disrupted like it hasn’t in decades. Unlike other events like Hurricane Sandy or even the 2008 financial crisis, the coronavirus is impacting essentially every corner of the world and more or less every industry.

Smaller insurance companies may not survive the onslaught of new requests, and many larger firms may need to downsize in order to make it through these painful economic times.

But innovation investments including artificial intelligence are not going to stop and, in fact, innovation will be one of the key factors in what helps the winners survive. However, those investment priorities will change.

In this article, we discuss five key trends in the insurance industry now and where artificial intelligence is likely to have a more important place in the industry given the pandemic. The AI use-cases we discuss draw directly from our AI Opportunity Landscape research in insurance, which global insurance firms use to determine where to focus their AI and automation efforts.

We track the full range of known AI investments and artificial intelligence startup companies in the insurance industry, aiming to highlight the portions of the AI space in insurance that we think are likely to grow and find a match with existing trends.

First, what we have found is that there may be a new market for pandemic insurance, which we discuss below.

New Markets for Pandemic Insurance

While insurance firms calculate risk for a variety of events from tsunamis to economic downturns and beyond, the complete economic shutdown resulting from the coronavirus pandemic is likely to not only change how insurance firms write their policies and handle their claims but also how they calibrate risk for future pandemics.

When we think about predicting the spread of a virus, we often think about the federal government. Large insurance companies are likely to get their hands on these models as well so that when future events occur, they can calibrate how they should change their sales offerings or their forecasts in order to better adjust and brace for similar events in the future should any happen in the decades ahead.

This will involve drawing on new third party data sources from governments and nonprofits around the world that will increasingly be keeping a pulse on pandemics and involve new modes of predictive modeling.

While some artificial intelligence companies already help insurance firms calibrate risk, predictive applications for pandemics are likely to be so complex that a new ecosystem of solutions will develop, and many insurance firms will aim to build these models in house.

How Insurance Carriers Will Respond to Remote Work

As of 2019, approximately 43% of the AI solutions marketed specifically to the insurance industry were for underwriting. These applications are designed to not only reduce the risk that insurance carriers take on, but increase revenue.

However, the shift toward remote work may contribute to a general refocusing on the part of insurance carriers that need to reconfigure their workflows in key business areas. These new configurations are likely to include some level of automation, and AI will likely be a part of any conversation in which workflows need to become more and more digital. 

Insurance carriers will have to get used to remote work for the foreseeable future.  As a result, applications that make remote work easier may take away from the market share that underwriting solutions currently have. Applications such as enterprise search and conversational interfaces may come to the forefront as more important than ever in the insurance industry.

Enterprise Search: Remedying Key Problems With Remote Work

Enterprise search applications allow employees to search through a company’s digital ecosystem, including its CRM, email management software, website, call center logs, and more. Employees can type in a keyword or ask a question in a search bar and pull up documents, emails, and more that contain that search term or would answer that question.

These applications are likely going to become more popular as teams continue to adapt to remote work. For example, if a claim adjuster wants to check if a claim is fraudulent or not, they might ask other adjusters they work with if they’ve seen a claim similar to the one they are working with. That is much harder to do remotely.

Instead, enterprise search applications could help the adjuster search for similar claims on their own within the company’s digital ecosystem. This is just one example. Enterprise search applications tend to have general use across multiple business areas.

Underwriters can use them to search for past customers and get an idea of what to price a new applicant’s policy at, and customer service agents can use them to get a “360 degree view” of a customer, which we explain in more detail below.

Sinequa is one AI-enabled enterprise search vendor that offers solutions for the insurance industry. Their marketing video below provides an overview of how companies can use their software to find information that already exists within a company’s digital environment, including experts at the company that may be able to answer questions about particular topics:

The Potential New Importance of Customer Service Automation

AI-enabled customer service applications include enterprise search and conversational interfaces. Enterprise search software can allow call center employees and other employees that can work from home to pull up information on customers from a variety of digital sources, decreasing the likelihood that they will need to speak with others in the organization to get everything they need to handle a customer’s inquiry or request.

This so-called “360 degree view” of the customer is a popular value proposition for enterprise search vendors, and it may be more relevant than ever in a world where employees are unable to collaborate to solve problems in person.

Whereas enterprise search applications augment the work of existing employees, conversational interfaces and chatbots can automate some simpler parts of the customer experience altogether, either by providing customers information in a chat window or routing them to the appropriate employee via chat, email, or phone.

Many of the top insurers in the US claim to offer chatbots that allow potential insurance applicants to get quotes within a chat window and allow customers to get basic information about their policies and how insurance works. For the most part, chatbots are best used for routing customers to the correct department or providing them information from an FAQ page, but insurance carriers may want to invest in the technology more than they are currently in response to the coronavirus pandemic.

Auto insurers in particular, no strangers to AI, could experience much larger call center volumes and website traffic as customers seek to update their insurance policies to reflect how little they are driving during the pandemic. Given the difficulty they may find hiring new call customer service and salespeople at this time, chatbots could be one way auto insurers meet the higher customer demand for information about policies and premiums.

Talla is an AI venor that specializes in chatbots that can pull information from FAQ pages and digital assets and present it to customers in a chat window, boasting a potential 90% automation of support tickets. Below is an example of a Talla chatbot interaction in which a customer says she is having trouble logging into her account:

Customer Assist overlay on an example site.
An example of Talla’s Customer Assist product, courtesy of the company’s product page.

How Remote Work Will Affect Cybersecurity in Insurance

Cybersecurity teams are being forced to work remotely as well, potentially opening themselves up to entirely new types of risk and new kinds of social engineering campaigns. Digital means of communication become more and more popular as teams work remotely in dealing with the coronavirus and work will likely remain much more remote in the years ahead.

Applications that detect social engineering emails or anomalies in internal communications via chat, email, and other channels will need to be strengthened. New protocols and applications for detecting anomalous behavior within one’s digital environment will have to be developed as well.

While in the past, insurance companies may have known that anyone accessing a certain program or database was in one room, now they could be anywhere. Insurance companies will need new modes of identity verification to ensure people are who they say they are.

AI Applications for Sales Enablement

Insurance sales are likely to fall as a result of the pandemic’s economic fallout. According to Deloitte:

Under these circumstances, insurers that have invested in advancing their digital capabilities will likely be better positioned in the short term to maintain a connection to their distribution partners, who, in turn, should be able to offer faster and more comprehensive services to their clients.

Many insurance firms do not sell directly to consumers. These companies rely on brokers, agencies, and financial advisors to promote their products. But channels like these are increasingly freezing as face-to-face sales plummet dramatically in light of the coronavirus.

There was already a trend in insurance of companies creating a better mix of agencies, brokers and their own direct sales models. Now there will be a great urgency towards digital lead generation and digital sales enablement technologies as companies are forced to adapt to a sales environment that almost certainly has to begin with either phone, physical mail, or some kind of online channel.

There will be AI applications for determining ideal customer audiences, AI applications for measuring the results of a marketing automation campaign that may involve both physical mail and email, and AI applications for determining which customers are most likely to take a potential upsell opportunity.

The domain of enhancing marketing automation with artificial intelligence is still rather nascent. However, the ability to find target audiences and determine ideal targets to offer them based on the success or failure of previous marketing campaigns is a relatively mature portion of the artificial intelligence ecosystem that we believe the insurance industry is going to adopt with increasing veracity.

Surviving Pandemic Disruption in Insurance

Insurance companies knew they couldn’t cover something like the pandemic in the past. After SARS, they made sure that pandemics were not covered in their other campaigns. According to Attorney Ross Angus Williams with Bell Nunnally & Martin in a recent Washington Post article “It’s really a Wild West situation for a lot of businesses as to whether they’ll have coverage.”

Despite all of this, most insurance companies are going to be taking a serious financial hit as businesses are forced to stop, as events are forced to cancel, as unforeseen setbacks and damages occur the degree to which almost no one could have predicted.

This is likely to force companies to change their business model and the way they work. Companies may focus on doubling down on areas of their business where they perform best, potentially areas where they have the greatest market share.

Future moonshot innovation efforts may focus on maximizing areas that companies believe they already have an advantage in because they’re going to be changing their sales model and their service model.

They’re going to want to focus on a market where many insurance carriers will double down and markets where they know that they’ll succeed. For example, firms with experience lending to farmers may double down on that line of business and firms with a strong focus on specific industries like entertainment or manufacturing may go deeper into the needs and specificities of those industries.

This may be necessary because there are going to be limited funds for new areas of traction. Insurance companies will need to build that up again. This may also be necessary as the new normal will change many facets of business, and they’ll need to focus a lot of time just to adjust to it. Concentrating that learning on specialties that they already have will be productive.

Conversely, it may be ill-advised for a company to radically change their sales and their service modes. Just like Jack Welch when he stepped into General Electric, we can expect companies to cut unprofitable or nascent portions of their business and to determine the new normal in the areas of business that they believe can get them back to profit margins, back to financial safety for their companies and their teams.

Emerj for Insurance Leaders

Insurance leaders use Emerj AI Opportunity Landscapes to develop AI strategies for automating customer service workflows, cybersecurity, and more. Our data on the insurance industry allows innovation and strategy leaders to confidently steer their companies toward ROI with AI projects for a variety of important use-cases. Learn more about Emerj Research Services.



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