October 31, 2016 | Written by: Lynn Kesterson-Townes
Categorized: AI | InsurTech
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At World of Watson 2016, I attended several insurance-focused sessions (speaking at one of them), as well as hosting an industry dinner. I came away from the conference with three key observations:
- The insurance industry is beginning to leverage the Internet of Things.
- With an eye on enhancing growth, insurers are working on engaging millennials.
- Insurance industry leaders are exploring the power of cognitive computing.
The insurance industry is beginning to leverage the Internet of Things. Insurers understand that consumers – and their stuff – are increasingly connected. Forbes estimates that 6.4 billion devices are already connected and 5.5 million new devies are being added every day. This creates a huge opportunity for insurers to incorporate Internet of Things (IoT) initiatives – like the connected car, the connected home, the connected life, aging in place, and the connected work environment – to enhance their relationships with policyholders and improve claims processes. For example, State Farm gives home insurance policyholders discounts for using Nest smart devices, like smoke and carbon monoxide alarms. John Hancock uses Fitbit data to reward policyholders who adopt a healthier lifestyle. Erie Insurance helps claims adjusters gather data using Google Glass.
With an eye on enhancing growth, insurers are working on engaging millennials. Pleasing millennials is proving to be quite a challenge for insurers. Legacy insurance products aren’t attractive to millennials and historical ways of selling insurance don’t work either. Frankly, millennials don’t trust insurers. An IBM Institute for Business Value study reveals that 89% of millennial consumers believe friends’ comments over company claims. So, what are insurers doing? They are building the customer relationship first and selling insurance second. For example, Effective Coverage, a national online renter’s insurance provider, has over 100 videos on its website that answer questions about renter’s insurance. Insurers are also going direct. Millennials are purchasing insurance directly online, cutting out traditional agents. As a result, French insurer AXA has funded PolicyGenius, an online-only insurer. Similarly, MassMutual started Haven Life specifically to deliver insurance direct with end-to-end digital distribution and servicing.
Insurance industry leaders are exploring the power of cognitive computing. Hidden in data, policyholders reveal what they are doing, why they buy, and even how they feel. Armed with data from an array of analytics from behavioral and digital to predictive, insurance providers are beginning to “connect the dots” with cognitive computing to better understand and deliver what their policyholders want – sometimes before they know it themselves. Southern Farm Bureau is using IBM’s cognitive tools to revolutionize its marketing and sales processes resulting in improved marketing engagement, a larger share of wallet, and incremental sales. In addition, cognitive is enhancing insurers’ decision-making capabilities to drive faster claims processing, improved underwriting and better portfolio planning. Swiss Re is using cognitive computing to make faster, more confident underwriting decisions.
These days, insurance industry customer engagement executives know they need to reach prospective and current policyholders in context at every point in their relationship by innovating personally relevant and rewarding experiences that draw customers in and keep them engaged. The good news is that cognitive computing can transform the firehose of information streaming in from IoT devices, social media, and a plethora of other structured and unstructured data sources to deliver personalized, compelling brand experiences that drive higher conversion rates, improve customer experience and increase loyalty – all while improving insurance operations.
For more information on how cognitive computing is impacting the insurance industry, check out The Power of Cognitive Commerce for Insurance.