August 11, 2021 By Jerry Cuomo 9 min read

A conversation between Jerry Cuomo and Carol Poulsen from The Co-operators Group on Automation in the Insurance Industry.

Covered in this chapter

  • Disruption in the insurance industry
  • Automation in the insurance world
  • AI in the insurance world
  • Shifting risk and lowering costs

The Art of Automation: Table of Contents

Another industry lens

This chapter of the Art of Automation is a reduced transcript of a conversation between Jerry Cuomo and Carol Poulsen, Chief Information Officer at The Co-operators Group. In our second chapter of AI-powered Automation viewed through the lens of a specific industry, Carol and Jerry discuss the important role automation is playing in insurance and how companies are moving from standard risk mitigation to artificial intelligence (AI)-powered risk prevention. They also explore how automation is allowing insurance companies to put customers at the center, instead of at the end of a process. Finally, they predict what AI innovations could come to insurance in the coming years and how those innovations could shift risk and save you money.

Jerry and Carol

CUOMO: Welcome to the Art of Automation, a podcast that explores the application of automation in the enterprise. You all know I love talking about autonomous vehicles and using them as an example of how AI and automation can team up with us humans to make everyday life better; and in this case, I believe safer.

Well, such advancements in AI-powered Automation are causing a ripple effect across multiple industries; and specifically, think about how these vehicles might disrupt the landscape of the insurance industry. It’s entirely possible that auto insurance will change into something very different than what it is today.

Think about it — autonomous features are supposed to make cars safer, right? Well, you would think this would result in lower car-insurance premiums; or, would they result instead in higher premiums because when crashes do occur the high-tech features make repairs extremely expensive? How does an insurer actually calculate risk? Who are the parties that are liable if an accident does occur?

Well, with the introduction of smart devices in the home, on the road and on your wrists, we are seeing a glimpse of the fuel by which the insurance industry can reinvent itself into a data-driven AI-powered Automation engine that is poised to make everyday life better, safer and maybe even more economical.

Today’s guest has a proven track record of putting emerging technology to use to transform industries; and specifically, who better to discuss automation in insurance than my friend Carol Poulsen, who is the CIO at the Co‑operators Group. As you all know, Co‑operators is a leading Canadian-owned insurer offering auto, home, life, farm, travel and business insurance, as well as investments.

Now, before Co‑operators, Carol held several leadership roles at TD Bank and the Royal Bank of Canada.  Her motto is disrupt or be disrupted, and this is where we’ll start our discussion. Welcome, Carol, to the Art of Automation.

POULSEN: And here we are again, Jerry.

Insurance can be exciting, too

CUOMO: Carol, can you share with our listeners why you’re so excited about the insurance industry; and, specifically, why now? And think about the current events and how they’re putting an exclamation point around insurance.

POULSEN: Sure, I’d be happy to. I think what I find really exciting about the insurance industry right now is we are doing our best to disrupt our own business. I really think that that’s the way forward. If we don’t, somebody will disrupt it for us absolutely.

The ways in which we’re trying to disrupt ourselves center around two aspects. The first one is the traditional relationship of an insurer to a client, and we’re trying to put the client at the center as opposed to the end of a process.

The way in which we’re doing that is to look at — what do they need from us? That history has been that we have provided risk mitigation. So, you buy an auto policy, a home policy or a life policy, and our relationship with you is you pay money every month for these policies and, hopefully, nothing happens and you never hear from us. But, if at some point, your house burns down, you get in a car accident or, God forbid, somebody dies, you really hope that we treat you well.

CUOMO: Right.

POULSEN: That’s really not the kind of relationship we think the future demands, and that when we think about risk mitigation to our clients, it’s more than mitigation after the risk has happened. It’s also about risk prevention.

We’re very focused, right now, on looking at ways through AI, through automation and through relationships with other companies in other industries that we can absolutely provide prevention advice and prevention services. So, you might think IoT in the home, on the body. You might think that we would work with large companies that have alarm services that we could offer blended service to and really be out there in front of the event happening.

We started this actually before we started trying to disrupt ourselves with something as simple as a text letting you know a hailstorm’s coming. You could put your car in the garage. You’re much happier and so are we.

CUOMO: Useful, yes.

POULSEN: Yes. So, that’s just a tiny way of looking at it, but what we really want to do is wrap risk mitigation around property and casualty insurance, around life insurance, so that we’re all more focused on preventing the risk than paying out after something unpleasant has happened.

The other thing that I would just mention is the changing face of transportation, too. And to say that, it’s a broad term, but it means everything from automated vehicles and who is the insured then and who is at fault if an accident happens, to the fact that many car manufacturers are starting to offer a bundled insurance offering when you buy the car, which is changing the point of origination. We need to be there with the car companies when this happens.

So, again, that’s a huge disruption for the insurance industry that provides an interesting challenge and an opportunity.

Automation in the insurance world

CUOMO: Carol, this is the Art of Automation, so let’s talk about the relationship between insurance and automation.

POULSEN: Well, if you think about it, automation has been around for a really long time. What’s different now with insurance is automation can be offered at so many levels, and there are so many new tools and services and products out there for us to use to automate. I will go everywhere from a basic sort of pedestrian robotic process automation (RPA), which is really about looking at where is there a process happening that’s very manual, and we’re going to stick an RPA process in there instead. I really view that as a Band‑Aid because, ultimately, you’re going to have a bunch of these and you’re going to refactor all of that at some point.

CUOMO: Most likely true, yes.

POULSEN: So, I view that as a time-sensitive solution but one that’s working really well. We’ve business cased all of those, and we’re finding great value in them, at present, and we’ll keep using them because you’re not transforming everything simultaneously. There’s always some area that you’re not working on right now that might benefit by some RPA.

A sort of middle tier for me of innovation and automation would be a chatbot. And, as it turns out, we have a chatbot in our life insurance area that is there to advise insurance advisors on some of the more complicated aspects of life insurance. We happen to have powered it by Watson-as-a-service through the IBM Cloud. And it’s doing very, very well.  

And then really much larger views on automation are bringing in tools to automate a service that may be between ourselves and another company. It may be multiple companies working together, and we’re automating an offering that hasn’t existed before. I also think about automation in terms of our data center services and using AI to get insights into those so that we’re offering cleaner, more robust services. I also think about it in terms of claims settlements, for instance. We are using some new tools in claim settlements so that we can deliver straight through processing for claims. So, it’s everywhere.

CUOMO: Any sense of the efficiencies you get as you add automation?

POULSEN: So, I would say, first of all, if you’re replacing a person, automation doesn’t need to sleep — it doesn’t need to take weekends or holidays — and it is far more consistent than a human being, as well. So, not only are you getting 7/24, 365 out of that piece of automation, if you wish — it’s also doing it remarkably the same every time. So, there’s a huge advantage there.

If you’re automating something like a claims process to be straight through, this process is going to save you tens, hundreds of people depending on the size of your organization and the amounts of the claims that you’re automating to go straight through. So, it scales, and I think it’s how you deploy it and how you think to apply it that is the limiting factor.

AI in the insurance world

CUOMO: Okay, Carol. Let’s join into this party of insurance and automation — let’s add the AI ingredient.  You had mentioned just briefly some application of AI; can you elaborate a little bit about the role of AI in automating in the field of insurance?

POULSEN: Sure. So, in a lot of insurance, the next step you want to take in any given process is dependent on a lot of data. In the past, that has been manual, and that’s why you have underwriters and claims adjusters looking at huge amounts of data. If we want to ensure that our services can be digitized so that people can access them when they need them, if you want to ensure that we are as rigorous as we can be in our ability to offer service in a price conscious way, you’re going to want to automate so that you are able to offer those services in a digital fashion. And if it’s automated, you can then put in the insight that you’re going to gain from data.

And then what data am I looking at? A person can only look at so much data at any given point in time. What we’ve had traditionally in insurance — and, you know, I have to say insurance isn’t quite up there with, say, retail in terms of usage but that’s why we’re trying to disrupt ourselves to move faster into this space. So, if we’re going to be looking at data to get insights to make the best next action — whether it’s solving a claim or deciding whether to take on a risk in the underwriting process — well, we can look at all kinds of data.

We can look at data that is not organized. We can look at it from any source, and we can look at it between partners if we start building relationships with other companies and other businesses that are aligned to ours but not the same.

Shifting risk and lowering costs

CUOMO: Can you help put it all together? Can you share a view of the art of the possible of these stars aligning? I mean, you were touching on some of it, but maybe another example that illustrates where this all might be going.

POULSEN: Okay, so, let’s say that I’m going to work with a company that offers security services in your home. And let’s say between us, maybe you get a discount on your insurance because you have these the security services. Let’s say the company that offers the security services and we share data that we’re allowed to share on the risk and on feeds from all of the IoT devices that are now in your home about the risk.

What if we are able to stop a fire from actually getting to the point of an issue with your home? What if we are able to look at your risk entirely differently because of the data that we’re getting in and it starts to tell us that we can shift the costs because of the data, we now have that supported by data that we didn’t have access to before.

CUOMO: I see, yes. Very cool. I want that service, actually. I don’t mind sharing data if I’m getting value like that back. Prevention is a big deal, and I think the way you’re outlining it, we have all the pieces; I think now you need the insights and the analytics to go with it. And you’re right — now that I think about it, who better to do that than you in the insurance world.

POULSEN: Yes. Insurance is really all about understanding a risk and understanding what it costs to mitigate that risk.

And I’ll toss you another example with cars. Let’s say we worked with a car manufacturer, because they are now collecting all kinds of data as your car is in motion with you in it — everything from the wear on your tires to the wear on your brakes to what radio station you might be listening to in your car, actually.

So, let’s say we worked with a car manufacturer and we shared the data — again, that we’re allowed to share — and we’re able to make recommendations to you about your driving that would allow us to lower your insurance and would allow your car to last longer than it is, like you can get benefits from both vendors in this case.

CUOMO: Yes, I’ll order one of those, too. All right, Carol. Thank you very much for joining us here at the Art of Automation, and we really appreciate your insights and I hope to have you back again some time soon.

POULSEN: It was great to chat, Jerry.  Thanks so much.

Learn more

Make sure you check out The Art of Automation podcast, especially Episode 12, from which this chapter came.

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