the rise of artificial intelligence in insurance – …...• the rise of artificial intelligence...
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Boyi Xie | NAIC Webinar | 09/ 26/ 2018
The Rise of Artificial Intelligence in Insurance – Applications Boyi Xie , Swiss Re
NAIC Webinar | September 2 6 th, 2 018
Boyi Xie | NAIC Webinar | 0 9 / 2 6 / 2 0 1 8
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• The rise of Artificial Inte lligence has brought in technology transformation in many industries
• This presentation will show use cases in insurance that leverage the recent developments of AI
• These use cases are being used across the entire insurance value chain
• Artificial Inte lligence is used here as a broad terminology that refers to the modeling methods, tools and platforms, applications, big data utilization, and the thought process for problem solving in the fie ld of Artificial Inte lligence
Overview
2
Sales & Marketing Application / Submission
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Use big data and machine learning to better identify and analyze client needs
• Cluster clients based on the need of insurance coverage
Prospecting Clients – Filling the Protection Gap
3
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Hail Insurance
Wildfire Insurance
Flood Insurance
Auto Insurance Life Insurance
An analogy to product recommendation or
movie recommendation.
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Monitor market movements to identify business opportunities and mitigate risks
Originating New Business – Market Intelligence
4
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
M&A
Credit
Management
Capital
Share Price
EPS
P/ E
RBC
Curr Ratio
Debt/ Equity
Solvency
Liquidity
Credit Risk
Volatility
VaR
Lower Level Signals Intermediate Level
Signals Higher Level
Signals
Attributes extracted from unstructured (text) and s tructured data from different data sources.
Y/ N
Business Opportunity
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
Expediting Application Process
5
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
• Expedite the application process while maintaining an accurate quantification of risk
Important predictors
Unimportant predictors
Reduced claim amounts per policy
Increased claim amounts per policy
Lengthy Applicat ion Forms
Expedited Applicat ion Process
Efficiency & Insights to write better and more
business
1 2
3
Better Estimation of Risk
Expediting Applications
Write More Business
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Automate the information extraction from submission documents to improve efficiency
Streamlining Submission Handling
6
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Algorithms developed in AI enrich the availability of s tatis tical models for loss estimation
• These models can bring in more accurate loss prediction
Improving Loss Estimate
7
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Total incurred loss
Number of losses
Claim Rate
Claim Frequency
Average amount incurred per loss Claim Severity
Predictive modelling targets
Rich availability of statistical models
o Linear Regression o Logistic Regression o Generalized Linear Models o Decision Tree o Random Forest o Gradient Boosting Machine o Support Vector Machine o Bayesian Models o Deep Learning
𝑅𝑅𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟𝑟 𝜃𝜃 = 𝑅𝑅𝑟𝑟𝑒𝑒𝑒𝑒𝑟𝑟𝑟𝑟𝑟𝑟𝑒𝑒𝑟𝑟𝑟𝑟 𝜃𝜃 + 𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃𝑃 𝜃𝜃
=1𝑁𝑁� 𝐿𝐿 𝑃𝑃𝑟𝑟 ,𝑓𝑓 𝑥𝑥𝑟𝑟;𝜃𝜃 +
𝜆𝜆2𝑁𝑁
| 𝜃𝜃 |2𝑁𝑁
𝑟𝑟=1
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• The effectiveness of the underwriting rules/ triggers for loss estimate can be evaluated
• A better underwriting ecosystem can be built to improve the accuracy and efficiency of underwriting
Accelerating Underwriting
8
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Underwriting Triggers
Manual Underwriting Underwriting
Decision
Automatic Underwriting – e liminating unnecessary UW triggers can improve efficiency of the UW process
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Machine learning models can help better evaluate the risk level during underwriting
Classifying the Risk Class
9
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Use inforce data to estimate the likelihood of a policy lapse , which helps proactive customer engagement
Predicting Lapse
10
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Use algorithms to understand the behavior of policyholders
Insurance Product
Policy Terms
Age
Premium Payment History
Health Status
Life Changing Events
Lapse? Y/ N or
P(Lapse)
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Use of sate llite images to expedite damage estimation
• Improved claim estimation
• Reserving/ capital preparation
• Proactive customer care
Estimating Claims
11
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
𝒑𝒑𝒊𝒊 𝒑𝒑𝒊𝒊 = f( - )
Damagibility 𝐷𝐷 Sate llite 𝑆𝑆𝑟𝑟𝑎𝑎𝑎𝑎𝑟𝑟𝑟𝑟 Sate llite 𝑆𝑆𝑏𝑏𝑟𝑟𝑎𝑎𝑏𝑏𝑟𝑟𝑟𝑟
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• Mining large scale of data to screen risks, and identify trends of risk development
Identifying Potential Risks
12
Sales & Marketing Application / Submiss ion
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
News Articles
Machine Learning Based Classification
Document Retrieval
Content Representation
Machine Learning-Based
Class ifie r Topic
Quantification
Feedforward Neural
Network
Regular Expression & Fuzzy Query
Word and Document Embedding
Institution Actions
Travel Restrictions
Shortage of Medical Supply
Antiviral
Unexpected Death
Boyi Xie | NAIC Webinar | 09/ 26/ 2018
• The rise of Artificial Inte lligence has brought in technology transformation in many industries
• This presentation discussed use cases in insurance that leverage the recent developments of AI
• Insurance is a highly specialized industry and would need technology customization
• It is s till an early s tage of the application of AI in insurance but we have already seen many opportunities
• While there are a lot of excitement, we would s till need to proceed with cautious in the AI adoption
Summary
13
Sales & Marketing Application / Submission
Costing & Pricing Underwriting Inforce
Management Claim
Management Risk
Management
Boyi Xie | NAIC Webinar | 09/ 26/ 2018 14
Boyi Xie | NAIC Webinar | 09/ 26/ 2018 Boyi Xie | NAIC Webinar | 0 9 / 2 6 / 2 0 1 8
Legal notice
15
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The information and opinions contained in the presentation are provided as at the date of the presentation and are subject to change without notice. Although the information used was taken from reliable sources, Swiss Re does not accept any responsibility for the accuracy or comprehensiveness of the details given. All liability for the accuracy and completeness thereof or for any damage or loss resulting from the use of the information contained in this presentation is expressly excluded. Under no circumstances shall Swiss Re or its Group companies be liable for any financial or consequential loss relating to this presentation.