The Digital Insurer: Creating a Blueprint for the Future

TODAY’S DIGITAL REVOLUTION IS CREATING VAST SOCIO-ECONOMIC CHANGES. DIGITAL SOLUTIONS ARE IMPACTING CUSTOMER DECISIONS LIKE NEVER BEFORE, MAKING CUSTOMERS EVEN MORE AWARE, CONNECTED, AND DEMANDING. INSURERS HAVE AN OPPORTUNITY TO OFFER CUSTOMER-CENTRIC SOLUTIONS AND OVERCOME TRADITIONAL INDUSTRY CHALLENGES. INSURERS THAT CHOOSE A DIGITAL PATH WILL REAP THE REWARDS, WHILE THOSE THAT HESITATE WILL FIND THEMSELVES AT A SERIOUS DISADVANTAGE IN THE NEW DIGITAL MARKETPLACE.

TABLE OF CONTENTS

MACROECONOMIC TRENDS

GOING THE DIGITAL WAY

ELIMINATING THE BAD APPLES

BUILDING DIGITAL STRENGTH

CONCLUSION

HOW WE DO IT

REFERENCES

ABOUT US

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1. Macroeconomic Trends

The insurance industry has been facing economic pressures for several years now. Stringent regulatory requirements, rising medical costs, and the financial pressures of a weak economy are forcing insurers to rethink their business strategies. The situation will get even more complicated when technological innovations like self-driving cars become a reality.

The combination of pressures outlined above has driven some insurers to pursue market share by keeping premiums unsustainably low. Other headwinds include:

• Financial uncertainty and decreased customer confidence• Increasing cost of operations• Increasing fraud, including new types of fraud• Low interest rates and inflation, leading to lower yields• Mergers and acquisitions• Inflexible and outdated technology infrastructure• Changing customer demographics and new channel needs

However, the news is not all negative. There are number of opportunities to leverage digital breakthroughs like Internet of Things (IoT), Mobility, APPification, and Bioinformatics to improve performance and profitability. These include:

• Using digital channels to reach new untapped markets• Increasing customer engagement with product owners to co-create new products• Leveraging social media to connect with customers and understand their behavior and needs• Deriving better insights, a holistic customer view, and operational excellence from digital technologies

With a deep understanding of the sources of digital disruption, visionary insurers can adapt quickly to stay ahead of the curve, overcome these challenges and succeed.

2. Going the Digital Way

While insurance companies have little or no control over regulatory institutions, customers and business partners, they can rely on technology and processes to stay ahead of the curve.

Traditionally, insurers have focused on offering innovative products, but there is very little scope to gain a competitive advantage from such strategies. Taking a cue from customer-driven industries, insurers should instead leverage digital technologies to adopt a more customer-centric approach.

In today’s connected world of always-online customers, insurers stand to gain from analyzing consumers’ digital footprints.

Wearables such as Nike+ and Fitbit can provide insight into the healthy habits of their customers. Loyalty cards and digital payment options like Apple Pay, Samsung Pay or Square can provide valuable insights into spending habits. Insurers can also track customers’ life events on social media. All this can help insurers gain knowledge that can be applied to developing a customer engagement strategy and designing personalized solutions and bring them closer to their customers.

Insurers are also able to offer their services through several new digital channels. Customers are searching for insurance products online, and insurers can respond to customer queries and feedback on social media. More importantly, digital technologies enable insurers to reduce cost and enhance productivity.

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3. Eliminating the Bad Apples

Fraud is a major area of concern for insurers and according to industry estimates, accounts for between 5 and 10 percent of claims costs for U.S. and Canadian insurers. Conservative estimates put this price tag at around $80 billion per year across all lines of insurance.(Source: Coalition Against Insurance Fraud)

The good news is that new digital technologies give insurers a powerful set of tools to address fraud faster, better and more accurately.

Big Data Analytics can help build solid fraud detection and prevention practices by integrating various internal and external data sources to give a fuller picture of insurance claims and transactions.

Combining internal policy and claims data with third-party data like criminal records, judgments, foreclosures, frequent address changes, mortgages, and social network data can provide new insights on suspicious transactions. With the ability to use a greatly expanded data set, sampling is eliminated and insurers are able to build predictive models that increase accuracy.

With digital technologies in their arsenal, insurers can also detect fraudulent claims in real time and speed up the payment of legitimate ones. Below is a sampling of how the power of Big Data can be applied to detecting and preventing fraud:

Social Network & Link Analysis By combing through customers’ social links, insurers can build business rules and determine the likelihood of fraud by analyzing relationships, patterns of personal information changes, and combining this data with their claims history, rejected claims, and records of prior fraud.

Application FraudAs with credit scoring, insurers can employ Big Data analytics to identify the trustworthiness of and customer and accurately calculate risk. By checking a customer’s digital footprint and social connections, insurers can uncover evidence of any suspicious claims from the past.

Claim FraudWith the help of text and sentiment analytics, insurers can analyze large volumes of reports that have been filed by both claimants and adjusters, to identify patterns which can indicate potential fraudulent claims.

Internet of Things (IoT) Analytics IoT holds a great deal of promise for the future of Insurance. Policies can be personalized and tailored to customer needs and profile by collecting real-time sensor data from cars and homes to monitor customer habits and avoid false claims. This data can be analyzed for underwriting and pricing at each exposure with continuous monitoring of insured risks.

4. Building Digital Strength

Many industry leaders are already using digital to their advantage. Below are some great examples of how digital innovation is delivering value.• Progressive has deployed usage based insurance called

Snapshot1 to generate millions in insurance premiums.• State Farm, in partnership with ADT and IRIS,

provides remote home monitoring2 using mobile apps to offer more than 10% savings to customers.

• Allstate’s GoodRide3 app helps bikers track miles,routes, and maintenance logs for quick roadsideassistance.

• The Esurance video appraisal3 app helps policyholderscommunicate directly with claim adjusters after an autoaccident.

• Geico’s mobile app has a virtual assistant namedLily4, which uses Siri-like voice recognition to answercustomer’s questions on policy, coverage, and claims.

• Proteus uses a "digital pill"5 to remind patients when totake medications.

• Zurich Insurance partnered with Guardian to createthe Life Navigator6 app with digital content advice onfinancial planning for life events.

• Prudential’s Vitality program7 in the UK integratesdata from a range of sources to give life insurance andhealth insurance customers a personal digital plan withtips and incentives to become healthier.

• In Italy, BNP Paribas Cardiff has introduced theHabit@t8, a telematics system that uses sensors todetect fire, smoke, flooding, and electric outages, thenalert the customer and the operation center, whichimmediately activates an assistance service.9

• AEGON UK launched its online simplified lifeprotection offering, Simply Life10 for healthy customersbetween the age of 18 to 49, and can cost as little as£4.95 a month.

• Metlife has launched "The Wall" to providea 360-degree customer view for its call centerexecutives13. Built on MongoDB, The Wall bringstogether data from more than 70 legacy systems andsocial interactions and merges it into a single record.

• Sun Life has launched MoneyUP14 app, a gamificationapproach to improving financial literacy and moreengaging group savings customers.

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5. Conclusion

It’s no secret that digital technology has been changing lives and disrupting businesses. Now is the time for the insurance industry to adapt to these changes, before it becomes a matter of survival. Insurance companies that act too late or stumble through the transition will not only lose customers, but will also remain saddled with high costs and low sales.

Economic pressures, regulatory reforms, fraud, and threats to privacy and security are obstacles to success, but emerging markets, connected customers, social media and digital transformation can enable insurers to succeed.

Enormous developments in internet technologies have created too many options and reduced the customer’s attention span – they want tailored insurance coupled with super-quick service. For insurers, it is time to increase the speed of generating quotes, issuing policies, processing claims, and offering the customers an omni-channel customized experience.

Insurers need to adopt a fail-fast approach – quickly execute new technology pilot projects to see if they work, or to quickly go back to the drawing board.

6. How We Do ItAtos Syntel has a three-tiered approach for digital transformation with an outside-in customer-centric view.

• Customer Engagement - Examine all customer engagement channels and identify digitization opportunities in user experience,internet of things and mobility.

• Customer Insights - Empower the engagement layer with Big Data analytics on customer insights, customer analytics, and streaminganalytics through Social media, location-based analytics, and data in motion.

• Digital Backbone - Modernize applications, build APIs to legacy systems for real-time data exchange, and implement automation viaBPM, virtualization and cloud enablement.

Atos Syntel has created a Customer 360° framework for insurance, which combines all internal customer demographics, quotes, policies and claims data with their external digital footprint to identify cross-sell/up-sell opportunities to insurers.

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Digital One for Insurance

Atos Syntel Digital OneTM enables enterprises to transform into digital enterprises by leveraging the power of mobility, social, Big Data, analytics, Internet of Things and cloud technologies. Digital One combines Atos Syntel’s domain and enterprise systems expertise with next-generation technology capabilities to deliver end-to-end digital transformation to drive business outcomes.

Atos Syntel’s Digital Transformation in Action

• Atos Syntel has completely digitized and simplified an auto claims settlement process from reporting the first notice of loss, managing and renewing policies through automating the claim settlement process.

• For an auto insurer, Atos Syntel has developed a solution that predicts and identifies fraudulent claims to accrue huge savings on claims reserves.

• Atos Syntel has built an IoT framework that collects data from all mobile and telematics devices and applies analytics that calculate an individualized risk scorefor each customer.

• Atos Syntel has deployed a solution for a major insurer that has enabled them to reduce churn by 3% by leveraging digital channels to connect and retain vulnerable customers.

7. References

1. https://www.progressive.com/auto/snapshot/2. https://www.statefarm.com/insurance/home-and-property/homeowners/discounts/home-monitoring-offer3. https://www.allstate.com/mobile/good-ride.aspx4. https://www.geico.com/about/mobile-apps/lily/5. http://www.proteus.com/press-releases/proteus-digital-health-announces-fda-clearance-of-ingestible-sensor-2/6. http://www.theguardian.com/money/2013/feb/15/about-life-navigator7. http://www.pruhealth.co.uk/personal/vitality/8. http://www.bnpparibas.it/en/2014/03/03/bnp-paribas-cardif-wins-golden-circle-award-financial-innovation-habitt/9. http://www.canadianunderwriter.ca/news/options-abound/1003403055/?&er=NA10. https://www.aegon.co.uk/advisers/protection/simply-life.html11. http://www.emarketer.com/Article/2-Billion-Consumers-Worldwide-Smartphones-by-2016/101169412. http://www.theguardian.com/technology/2011/jun/05/smartphones-killing-pc13. http://www.dataversity.net/metlifes-wall-powered-by-mongodb/14. http://www.insurancetech.com/sun-life-improves-financial-literacy-with-gamification/d/d-id/1315046?

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Sandeep is responsible for verticalization of all digital solutions. He had spearheaded multiple digital transformation solutions to marquee customers across the USA and Europe.

Sandeep has over 28 years of IT Services/Consulting/Off-shoring experience with more than 17 years in Business Intelligence, Analytics space.

Sandeep Raut

ABOUT THE AUTHOR

about US

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Atos Syntel is a leading global provider of integrated

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application development and management, testing and

infrastructure solutions. Our digital services enable companies to

engage customers, discover new insights through analytics, and

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things. Our "Customer for Life" philosophy builds collaborative

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IP, solutions and industry-focused delivery teams with deep

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To learn more, visit us at www.atos-syntel.net