Elafris CEO Jake Diner, a Forbes Technology Council member, gives his insights on artificial intelligence and blockchain for insurance.
A version of this article was originally published on Forbes.com.
The insurance sector has a longstanding reputation for resisting change. Who can blame the industry? Avoiding risk is in their DNA.
Surprisingly, in my experience as a Silicon Valley insurtech serial entrepreneur, this characterization may no longer be valid. Since 2010, we have partnered with insurers to add technologies to improve their business. In daily conversations with carriers and agents, we have seen a quickening in their adoption of new tools and new ways of doing business.
Agencies are taking the boldest steps forward when launching artificial intelligence and blockchain projects. Recent insurtech venture investment has multiplied the tools available that are solving palpable insurance problems and providing quick and significant returns.
Competing for insurer interest are blockchain applications. Blockchain, the digital protocol invented to run cryptocurrency ledgers, seems readymade to solve the industries most frustrating challenges by adding trust and security to the patchwork of participants and systems that depend on insurance.
Earlier technologies put distance between insurers from their policyholders. Phone auto attendants droning “Press one to talk to Sales.” and voicemail that never seemed to get a return call. Artificial intelligence tools are different, enhancing and supporting the human connection and personal guidance that is core to the industry. Policyholders want to feel insurers understand them, empathize and listen. Customers crave tailored recommendations and advice. A new twist has emerged with the ubiquity of smartphones–the preference for texting, chatting and messaging over calling customer service for assistance. Research reveals that nearly everyone prefers to connect to brands via smartphone, online, and when it fits into their busy schedule.
This smartphone ecosystem dovetails perfectly with AI tools that give consumers what they want and how they want it, thereby improving the customer experience. Machine learning and natural language processing have found instant traction from carriers to agencies, despite some solutions being in the early stages of development.
Most well known of this set of tools are the customer-facing virtual insurance agents that have arrived in hundreds of varieties. Some live on agency websites, able to understand plain language questions and can also answer mirroring the customer’s own tone and vocabulary. Others are versatile, able to carry on conversations in WhatsApp, Facebook Messenger and on voice-enabled devices like Amazon Alexa. They are able to take care of insurance claims, handle questions about billing, take payments and churn out quotes by the thousands. The sophistication of the virtual agent applications are limited only by the insurer’s imagination. Connecting with the target market using approachable, human-like automation is helping insurers stand out to current and prospective customers.
Artificial intelligence enlisted to connect with and delight consumers is a compelling use case. It’s the first reason insurers jump into these new technologies. Our integration teams work closely with insurers of all sizes and types. Invariably, customers realize the energy they’ve wasted on all of the requirements of the insurance business. From underwriting, compliance, reporting, documenting, billing, quoting, so much time is spent on minutiae that the human connection gets shunted to the bottom of the priority list, and worse, the mundane or highly detailed tasks are simply wearing out the staff.
Customer Service and Sales departments appreciate the artificial intelligence tools that help locate answers, take care of details, and make sure workflows are as efficient as possible for the customer as well as the staff. This lets them focus on outstanding customer service instead of regulations, requirements and databases. For management and compliance teams, AI aids reduces costly errors and delays, and quickly identifies potential fraud and risk that may have gone undetected without the AI-enabled tools.
Chinese and Babylonian insurance from thousands of years ago distributed risk and trust to facilitate commerce and the advancement of society. Blockchain continues this tradition. Digital transformation increases the speed and complexity of the insurance business, there is a growing need for certainty, trust and automation in insurance transactions. With demanding regulatory compliance requirements, evolving fraud detection and mitigation needs, swelling numbers of third-party payments to make and a complex network of data sources, insurers can no longer work with manual processes and non-integrated systems. Blockchain promises trust and reliability among the market participants without the need to integrate with each and every system.
Imagine a building project where insurance coverages must be verified for all suppliers and contractors. Significant time and cost is dedicated to making sure that required coverages are in place and that valid certificates are collected. What if coverage is dropped? What if a transportation agent provides the fraudulent certificates?
The costs and delay of managing and monitoring this facet of the project is reduced by systems incorporating blockchain. The protocol lets managers trust that certificates are valid, meet what is required for the project, and are to cover the appropriate type of work. Integrated with automated project management systems, blockchain can collect, verify and alert to issues without constant oversight.
Machine learning methods applied to the volumes of data available to insurers makes advanced analytics and business intelligence within reach to even small agencies. They can affordably track product performance, predict loss and fraud, offer products that make sense with AI-automation, and even work on designing new products for risks emerging during the current digital transformation. AI unlocks previously hidden business growth opportunities.
Blockchain solutions let insurers design increasingly complex products assembled from blockchain-trusted coverages. These tailored products may come from single insurers or from companies who have not cooperated to provide insurance before.
As insurers gain more experience with the variety of artificial intelligence and blockchain offerings, we find they begin to discover the depth of transformation they can achieve. Both artificial intelligence and blockchain promise to make insurance one of the most dynamic and exciting fields to be in for the coming decade.
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