November 2, 2015 | Written by: Mark McLaughlin
Categorized: Risk & Analytics
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With IBM launching its newest IBV study on Cognitive, it’s worth reviewing the impact that cognitive business will have on an insurance industry under significant competitive stress… and an industry that has had significant uptake of IBM Watson. Insurers see significant competitive advantage in the cognitive space and for every public mention of insurers using Watson, there are others in various stages of development.
So how do insurers see cognitive opportunities? We believe the following opportunity spaces are good starting points:
- Development of new engagement models.
Insurers need to reinvent their interactions with their customers and distributors or face disintermediation from others who have those interactions… and cognitive approaches offer great opportunities to bake risk and security discussions into more everyday transactions.
- Discovery of “long tail” risk situations
Whether helping customer service representatives identify a new risk need or commercial underwriters uncover an obscure risk situation, Watson and other analytic approaches can identify hidden issues that need more discussion… and potentially more insurance coverage.
- Decision support
For knowledge workers assessing complex underwriting and claims situations, cognitive systems can quickly assemble and organize the right discrete and non-discrete information to make decisions more accurate and more complete.
Because insurers sell intangible products with uncertain pricing, our industry is always vulnerable to “bottom feeding” – quickly offering low pricing to gain market share, only to lose profits later on due to badly priced risk. In this environment, insurers with a competitive edge in insight can not only prosper; they can cede unprofitable business to competitors and magnify their advantage. Cognitive systems will eventually become “table stakes” in this environment.
The good news is that cognitive capabilities are increasingly available as services and are increasingly “baked in” to a range of insurance data and service provider approaches. Our industry, is moving to a world of composable business services and away from monolithic on-premise software that is difficult to maintain and expensive to install and customize. In that world, “Cognition as a Service” will be the next frontier.