Cognitive Use Cases for Insurance

Advances in Cognitive science, also known as Artificial Intelligence is making sweeping changes in many industries and professions today. The sheer ability to source, analyze and construct policies using individualized and personal information will facilitate underwriting and claims processing in personal and commercial lines. Cognitive science can power decisions that go beyond the current use of rule-based knowledge and the retroactive use of the results of predictive analytics.

As per HBR – the good news is that the early dividends from Cognitive computing are already within reach of most midsize companies as they look for ways to expand their digital boundaries. In fact, the building blocks of Cognitive Computing can produce great results with fewer technical requirements and less time and money than many companies realize. What’s more, those that take this initial step are getting a leg up on Cognitive Computing’s future, since that step is going to be a prerequisite for everything that follows.

Allstate Business Insurance, a division of Allstate Insurance, used the tools to develop a virtual assistant known as ABIe (pronounced “Abby”) to answer questions from its 12,000 agents. Last year, Swiss Re established dedicated Center of Competence for cognitive computing in collaboration with IBM. Along with IBM, they are developing a range of underwriting solutions that rely on IBM Watson’s cognitive computing technologies.  A Peruvian insurer—RIMAC Seguros—which plans to use Watson Content Analytics for health insurance claims processing. “When a claim is made, Watson will scan thousands of policy documents and almost instantaneously pull out the paragraphs relevant to the decision at hand,” the report said, noting that in early tests, this cut the time to process a claim by more than 90 percent.

In a media statement, IBM reported that in just two years, the percentage of C-suite leaders across all 21 industries who expect to contend with competition from outside their own industry increased to more than half—54 percent today compared to 43 percent in 2013, according to the study, “Redefining Boundaries: Insights from the Global C-Suite Study.”. Fifty-two percent of insurer CXOs and 57 percent of bank CXOs see cognitive computing on the near-term horizon. In other industries, such as professional and computing services, which like insurance are heavily staffed by knowledge workers, just 43 percent selected “cognitive,” and only 37 percent of the CXOs see cognitive as a near-term force across all industries.

What is Watson?

IBM’s Watson is a cognitive-era system that learns and understands natural language just like human beings. There is no need to program every output with complex programming logic. It is a new species that is taught by design, learns by experience, learns from interactions, gets smarter over time and makes better judgments over time.

Watson enables humans to chat with it in natural language through a feature called “Watson Personal Advisor.” The Watson Personal Advisor capability was tested for the first time during an American quiz show, “Jeopardy.”

Source: Shaping the future of insurance with IBM Watson, December 2014

Some of the use cases of Cognitive computing in Insurance:

  1. Enable Advisors to deliver cost effective personalized advice
  2. Support agents and underwriters by pre-reading millions of pages of regulations, past historical cases, and relevant information
  3. Provide evidence based advice to claims adjuster using structured and unstructured datasets (images, contact center notes, claim notes, social media posts, etc)
  4. Helps make policy pricing/underwriting during sales and marketing
  5. Help counter fraud by analyzing structured and unstructured data in real time using speech to text, notes, policies and regulations, previous claim history, etc
  6. Consolidate, Search and Analyze enterprise data
  7. Advise members/customers on claims processing and guide them through personalized process such as getting rental car, or getting an appointment with restoration service, etc.

Also, Re-insurers have used cognitive computing in areas such as client engagement, helping insurance agents, underwriting assistance and claims.

IBM’s Watson is at the forefront of a new era of cognitive computing, in which virtual advisors interact seamlessly with consumers and agents – learning by experience, making better judgments and getting smarter over time. BM’s Watson is poised to revolutionize the way the insurance industry engages with its customers – both consumers and agents. IBM Watson is enabling this disruption by leveraging cognitive computing, in which apps and systems interact seamlessly with consumers through natural language, enhancing and scaling human expertise and learning with continuing use and new information. Watson can provide a personalized, consistent experience to customers, at scale, in today’s competitive environment.