Why Not a Bot? Adjuster Bots for Connected Cars

Why Not a Bot? Adjuster Bots for Connected Cars

We’re not quite there yet. But there is a path to get there—probably in only a few years.

We’re already at the point where fender bender claims can be estimated with a set of smart phone photos (offered by esurance and many other carriers)

But what more serious accidents which involve damage to a car’s mechanical systems? 

Here is one element of an Adjuster Bot solution: electonic control units, ECUs. For years, automobiles have been manufactured with dozens ECUs which control, monitor, and diagnose a broad away of systems within the vehicle, including its engine, power train, brakes, steering, airbags, electronic stability control. Information from ECUs can be accessed from vehicle’s On-board Diagnostic Port (OBD-II). The primary purpose of the OBD-II is to enable maintenance and repair of the various systems. (Telematics devices–aka dongles–plugged into the OBD-II port have been the primary method to gather and transmit telematics data to insurers.)

A second critical piece of the puzzle falls into place: communication. Automobile manufacturers are racing towards creating connected cars—typically using 3G or even 4G LTE cellular modems.

So this is what an automobile Adjuster Bot ecosystem would look like:

  • A cellular modem which tells the Adjuster Bot that an accident has occurred
    • And transmits data from ECUs describing the functional/non-functional status of major car systems
  • The AI-powered Adjuster Bot which, through deep learning, identifies the probability of repairing or replacing components within those systems; and which:
    • Alerts police and/or medical assistance as warranted (e.g. if airbags deployed)
    • Queries repair estimation and total loss systems
    • Integrates with the insurer’s Direct Repair Program
    • Creates an initial estimate of cost and time to repair
    • Presents a customized video to the driver, describing:
      • Arrival of tow trucks, transportation to a rental car facility, the split of insurer and policyholders financial responsibility; links to download a claimant app

Next up: Adjuster Bots for Connected Homes

Would you spot the warning signs of a failing project?

Would you spot the warning signs of a failing project?

Every large project I have been involved with began with enthusiasm and high hopes. The go decision concludes a sizable project of its own — creating and receiving approval for the business case. The initiative begins in a celebratory fashion. The project sponsors are overrun with volunteers for the project. There are numerous kick-off meetings with a festive tone. Communication about the project occurs often promoting the merits of the project. It is sunshine and roses ahead!

Flash forward, the project communication may have slowed down to a trickle. The project team members have lost their enthusiasm, and the project has become mundane. Many times there have been as many failures as successes. It is not unusual to lose a key sponsor. At times, it may become necessary to revise the goals of the project, or, in the direst situations, abandon the future phases.

I am sure that readers are thinking, “This will not happen to my project.” I certainly hope that is true! But, if your project is on a downhill slide, there are steps that can be taken to get back on course. An important first step is a project health check.

A project health check is designed to provide an independent and impartial evaluation of a program or project. The health check evaluates the overall health or risk profile, assesses stakeholder satisfaction, and provides practical recommendations that the team can use for reducing risk and in extreme situations, for project audit, recovery, or rescue. The health check covers all levels of the project from the business executives and sponsors to the technical team members to provide a comprehensive view. It focuses on:

• Business objectives, scope, and requirements assessment.
• Contracting and financials.
• All processes, deliverables, and communications quality.
• Exception management that includes issues, changes, and risks.
• Project data and plan assessment.
• People assessment.
• Best practices effectiveness.
• Evaluation of the technology and its feasibility and compatibility with the current and/or planned environment.

Very often, those closest to a project are the ones that have difficulty in seeing the progress. Health checks are best undertaken by third party assessors, who can provide an unbiased and balanced view and opinion.

My new report,  Staying on Track when the Transformation Road Changes, has more information on project health checks as well as the do’s and don’ts of running a successful project. I hope all of your projects are success ones!
 

I Have a Vision, I Have a Project, I Have a Team

I Have a Vision, I Have a Project, I Have a Team

This year I was honored to coordinate the 11th Celent Model Insurer program.  The journey started in September 2016 when we opened the window to submissions and will not end until April 4 at our Innovation and Insight day at the State Room in Boston, Massachusetts where Celent will award and present the best Information Technologies (IT) initiatives in insurance.

This year we received around 100 nominations from carriers around the world, including those applying for Model Insurer Asia. These nominations are a vast sample of the best IT initiatives in insurance. Particularly for Model Insurer Award, we evaluated 60 cases from countries like:

As part of our methodology, we classify Initiatives within the following themes:

A Glance at Some Cases

As part of the team that judged the cases, I was amazed by the quality of cases we received and by the methodology that insurers are using to implement their projects. I’d say that this year, Celent has witnessed both technology and methodology is moving further and playing an important role in insurance. Here are some examples of our cases:

  • An insurer in an island had to face high operational costs, limited skilled people, and lack of space, and then it decided to move its whole IT department to the cloud.
  • We also evaluated cases in which the need for a quick change to go to market forced the organization to create a separate organization to lead the change and act as another insurer.
  • One insurer, in order to implement its best product, started all from ground up.It hired the right people, made organizational changes, and conducted several market research in order to understand what really its customers wanted. From that point on, the insurer started to customize its core system.
  • Not to mention that Latin America has implemented its first peer-to peer insurer.

All of them are very interesting cases that make it difficult to describe in a single blog.

By evaluating all these cases a question arose, what was in common among these projects? I think the answer is simple. People leading these projects had a vision. Sometimes the long path to pursue success becomes bumpy, but it’s worth it. These cases are examples of people who embarked on a project to pursue a vision by using technology and methodology.

Celent has always acted as a catalyst agent that promotes change and innovation by leading projects and exposing case studies to the insurance industry. This year we’ve seen how insurance companies have responded by using technology to adapt themselves to a more competitive environment, and as part of Celent, I’m thrilled to be part of this evolution.

Lost in Innovation?

Lost in Innovation?

So, how do you avoid getting lost in innovation? The simple (and maybe glib) answer might be to buy a map, a compass and start to plan your route. However, what do you do when there is no map, no obvious path to take and no-one to follow?

The last 24 months have seen an incredible amount of activity across the sector in experimenting with novel proposition concepts fuelled by emerging technologies in the internet of things, distributed ledgers and bot-driven artificial intelligence. Although each new concept shows promise, we are yet to experience a clear and obvious pattern for winning new clients or delivering a superior shareholder return using them. Many of the most exciting novel ideas (and many are genuinely exciting) are yet to see any real business volume behind them (see my earlier blog for additional context of what insurtech has to offer in defining the ‘dominant design’ for new tech-enabled propositions).

So, as an insurer faced with having to balance how much it should invest in these new concepts versus furthering the existing business in what is probably a highly successful and scalable model, two of the big questions we often hear from clients are: “Which of these nascent concepts are most likely to deliver real business value the fastest?” and “How much effort should I be devoting to exploring them today?” These are the questions that we looked to address at our latest event in London that we called ‘Lost in Innovation’, attended by just over 70 inquiring insurance decision makers.

Faced with uncertainty, we followed an agenda that focused on the things that an insurer can control, such as the innovation-led partnerships they enter, the skills they develop internally, the criteria used for measuring value, and the potential challenges ahead that they need to plan for.

Celent analyst Craig Beattie presenting on emerged software development approaches

Alongside presenting some of our latest research on the topic, we were joined on-stage by:

  • Matt Poll from NEOS (the UK’s first connected home proposition in partnership with Hiscox) shared his experience on the criteria for a successful partnership.
     
  • Jennyfer Yeung-Williams from Munich Re and Polly James from Berwin, Leighton, Paisner Law shared their experience and views on some of the challenges in the way of further adoption, including the attitude of the regulator and potential legal challenges presented by using personal data in propositions.
     
  • Dan Feihn, Group CTO from Markerstudy, presented his view of the future and how they are creating just enough space internally to experiment with some radical concepts – demonstrating that you don’t always need big budget project to try out some novel applications of new technologies.

So, what was the conclusion from the day? How do you avoid getting lost in innovation? Simply speaking, when concepts are so new that the direction of travel is unclear, a more explorative approach is required – testing each new path, collecting data and then regrouping to create the tools needed to unveil new paths further ahead until the goal is reached. Scaling concepts too early in their development (and before they are ready) may be akin to buying a 4×4 to plough through the scrub ‘on a hunch’ only to find quicksand on the other side.

Some tips shared to help feel out the way:

  • Partnerships will remain a strong feature of most insurer’s innovation activity over the next 12-24 months. Most struggle to create the space to try out new concepts. Also, realistically, many neither have the skills or the time to experiment (given that their existing capabilities are optimised for the existing business). Consequently, partnerships create a way to experiment without “upsetting the applecart”.
     
  • Hiring staff from outside of the industry can be a great way to change the culture internally and bring-in fresh new ideas…however, unless there is an environment in place to keep them enthused, there remains a risk of them turning ‘blue’ and adopting the existing culture instead of helping to change it.
     
  • There are several ways to measure value created by an initiative. The traditional approach is a classic ‘Return on Investment’ (RoI). However, RoI can be hard to calculate when uncertainty is high. To encourage experimentation, other approaches may be better suited, such as rapid low-cost releases to test concepts and gather data to feel the way. Framing these in terms of an ‘affordable loss’ may be another way to approach it – i.e. “What’s the maximum amount that I’m willing to spend to test this out?” – accepting that there may not be an RoI for the initial step. Although no responsible insurer should be ‘betting the house’ on wacky new concepts, reframing the question and containing exposure can sometimes be all that’s required to create the licence to explore.
     
  • There’s still an imbalance between the promise of technology and the reality of just how far end-customers and insurers are willing to go in pursuit of value. The geeks (or ‘path finders’) have rushed in first – but will the majority follows? Regardless, to avoid getting lost in the ‘shiny new stuff’, a focus on customer value, fairness and transparency around how data is being used need to be at the heart of each proposition – plus, recognising that the regulator will not be far behind.
     

In summary, the journey ahead needs to be less about the ‘what’ (with all of its bells, whistles and shiny parts) and more about the ‘how’ (deep in the culture of the firm and its willingness to experiment – even in small ways) – at least while the map to future value is being still being drawn.

Celent continues to research all of these topics, including assessing the different technologies and techniques that insurers can use. Feel free to get in touch to discuss how Celent could assist your organisation further.

Celent clients will be able to access the presentations from the event via their Celent Account Manager.

How Insurity’s Acquisition of Valen Could Create a Virtuous Analytics Circle

How Insurity’s Acquisition of Valen Could Create a Virtuous Analytics Circle
It’s open season on insurance technology acquisitions in general, and for Insurity in particular. Today’s announcement of Insurity’s acquisition of Valen Analytics is now Insurity’s fourth acquisition in a multi-year string: Oceanwide, Tropics, and in rapid succession Systema and Valen.   The potential for crossing selling among the five customer bases is obvious.   Less obvious, but of potentially even greater value, is Insurity’s ability to invite all of its insurer and other customers to use its Enterprise Data Solutions IEV solution as the gateway to Valen’s contributory database and Valen’s InsureRight analytic platform.   Insurity now has the scale and the means to create a virtuous analytics circle: individual customers contributing a lot of data through IEV to Valens and receiving back analytic insights to feed into their pricing, underwriting, and claims operations.   Good move.

Conversation systems and insurance — one experience

Conversation systems and insurance — one experience

To start with full disclosure, I am a huge fan of the Amazon Echo. We have them throughout the house, and have automated our home so Alexa can control most light switches, ceiling fans and more. We play music through them, ask for the weather, schedule appointments, and more.

All my kids are believers from our 5 year-olds on up. It’s fun to hear one of my five year-olds ask Alexa to play the song YMCA and then burst into full song, including the dance. My one personal recommendation. If you have an Echo and children, turn off voice purchases. I found out the hard way.

So I thought I would check out how Alexa does with insurance. My plan is to try all the skills and leverage them into a report. I may even have to purchase one of Google’s new Google Home devices just to compare them in this use case.

So I spent considerable time this morning trying to get an auto quote. Let’s just say the outcome was that I gave up. I won’t name the insurer, as I am sure that their Alexa skill works well in other areas such as information sharing and likely works for others to get a quote, but it sure did not for me. I do want to give credit to the insurer, as they are out on the bleeding edge doing these quotes.

First it asked me my birth year. It heard 1916. That’s not when I was born, but that’s what it heard. I tried to correct it, using the instructions it had provided, but no dice. I gave up and started over, only to be born in 1916 again. This time it was so stuck I had to unplug the Echo. I was surprised, as Alexa’s voice recognition amazes me.

I’m old, but I’m not 101 years old.

I finally made it through on the third try with very careful enunciation. Made it through my wife’s birth year and the fact we’re both married (apparently being married to each other wasn’t important).

Got to the question on what body style. I tried convertible, since, well, it is a convertible. That wasn’t an option. Since the app had prompted 2 door car as an example, I tried it. Um, no. That’s not supported. That seemed odd, but I tried car. Apparently car is OK.

Made it through miles driven a year.

Go to age of the car. My car is a little older, but no antique. However, apparently 12 years old is fatal, as the app crashed with “Sorry I am having trouble accessing your skill right now”.

OK, odd, but wireless sometimes blips, so no problem. Started over for the fourth time.

Worked my way through all the questions, enunciating very, very carefully and got to age of my car.

Yep. Crashed again.

At that point, I gave up and decided to write a blog instead.

Or I could have played a game of Jeopardy with Alexa.

CES 2017: JUST HOW SMART IS AI GOING TO MAKE CONNECTED CARS AND CONNECTED HOMES?

CES 2017: JUST HOW SMART IS AI GOING TO MAKE CONNECTED CARS AND CONNECTED HOMES?
Walking the exhibit halls and attending sessions at the mammoth Consumer Electronics Show, it was easy to identify the dominant theme: AI-enabled Intelligent Personal Assistants (IPAs).
  • Manufacturers and suppliers of connected cars and homes are betting big on IPAs: overwhelmingly favoring Amazon Alexa.
  • Impressionistically, Google Assistant, Siri, Cortana and others trailed some distance behind.
Natural language commands, queries and responses provide a vastly more intuitive UX. And these capabilities in turn make owning and using a connected home or car much more attractive. But there is a deeper potential benefit for the connected car and connected home sellers: developing context-rich data and information about the connected home occupants and the connected car drivers and passengers. This data and information include:
  • Who is in the house, what rooms they occupy—or who is in the car, going to which destinations
  • And what they want to do or see or learn or buy or communicate at what times and locations
Mining this data will enable vendors to anticipate (and sometimes create) more demand for their goods and services. (In a sense, this is the third or fourth generation version of Google’s ad placement algorithms based on a person’s search queries.) Here’s what this means for home and auto insurers:
  • As the value propositions of connected cars and homes increase, so does the imperative for insurers to enter those ecosystems through alliances and standalone offers
  • The IPA-generated data may provide predictive value for pricing and underwriting
  • IPAs are a potential distribution channel (responding to queries and even anticipating the needs of very safety- and budget- conscious consumers)
A note on terminology: the concept of “Intelligent Personal Assistants” is fairly new and evolving quickly. Other related terms are conversational commerce, chatbots, voice control, among others.

Guidewire makes blockbuster acquisition of ISCS

Guidewire makes blockbuster acquisition of ISCS
Long sought after by Private Equity firms, other insurers, and the occasional investment banker looking for a transaction, privately held ISCS has chosen to join Guidewire (NYSE:GWRE).   ISCS adds its SurePower Innovation end-to-end suite to Guidewire’s existing InsuranceSuite end-to-end suite. This is a decided change of acquisition strategy for Guidewire. Up to now, all its acquisitions have fit into—or added a single new element—to InsuranceSuite.   Why?   Well, if you are a publicly held company growth is good. ISCS immediately brings more revenue and more importantly brings good market momentum with a solid sales pipeline.   ISCS’ focus on small and midsize insurers brings a few other intriguing possibilities. One is that Guidewire and its SI alliance partners will now aim at the large and very large insurer market, leaving the small and midsize market to ISCS. A second is that ISCS will become a vehicle for small insurer growth outside of the US. The third is that ISCS’ more extensive cloud experience, especially with AWS, will step up Guidewire’s movement to the cloud.   For now Guidewire shareholders have a heckuva gift under their Christmas trees.  

Have Electronic Applications Come of Age?

Have Electronic Applications Come of Age?

My first experience with an electronic application was in 2002.  I was working with a major credit card company who included a flyer along with the billing statement that provided information about how to apply on-line for their term life insurance product. We didn't know how many applications to expect; but based on the wide distribution, we planned on a high number.  Many months of effort went into developing the eApplication on the website and creating an interface for the collected data into the new business and underwriting system. This was cutting edge technology at the time. The electronic application collected the Part 1 – demographic information – of the application. The Part 2 – medical information – was collected by a third party. A whopping 523 applications were received from the first mailing. The campaign continued on an intermittent basis for a year with a few over 2,000 applications received. At the end of the year, we threw in the towel and quietly closed down the campaign.  

Why did the campaign fail? There was nothing wrong with the process and the technology, while primitive compared to today, worked well.  The problem was that the idea was ahead of its time.  People were not ready to buy insurance on the internet. In fact, most of the applications received were declined or heavily rated.  The people who applied were driven to do so by a less than stellar health history and had few other options available to them.   

Flash forward to today; digitization of life insurance new business is a hot topic. Consumers are buying everything from mutual funds to groceries on the internet.  However, based on Celent’s recent new business and underwriting benchmarking report, Resetting the Bar: Key Metrics in Life Insurance New Business and Underwriting, nearly 52% of all insurance applications received are still in paper form.

There are a number of problems associated with paper applications, from missing forms to illegible writing, which creates a tremendous impact on an insurer’s ability to process an application quickly and/or accurately. Industry benchmarks have placed NIGO (not in good order) rates at greater than 50%. Electronic applications essentially eliminate NIGO.

Our research shows a significant reduction in new business cycle time for insurers between 2007 and 2016. For high face amount writers, the average cycle time decreased from 52 days to 44 days and from 42 days to 33 days for moderate face amount writers. When asked how the better results were obtained, the majority of insurers had seen a reduction in cycle time due to the use of technology. Some responses included “increase in eApp adoption and increased use of an automated UW engine,” “eApp, more skilled staff, cross-training with 60% automated underwriting, so huge reduction,” and “increase in auto-issue rate.” Obviously, the new business process is ripe for automation.

In Karen Monks’ and my new report, The Doorway to Straight-Through Processing: Life Insurance Electronic Applications 2016, we profile nine software vendors and their 10 electronic applications marketed to life insurance. The report focuses only on stand-alone solutions in North America. For each vendor the solution is described using the customer base, data sources supported, functionality, and technology, as well as implementation and costs.

In 2002, the buying public wasn’t ready to shop for insurance on-line.  That attitude is changing.  An electronic application, along with an underwriting rules engines and electronic contract delivery, to enable straight-through processing will soon be the norm. The time for eApplications has arrived.  An electronic application opens the door to transform the insurance buying experience, increase agent and customer satisfaction, and potentially sell more insurance.

  

 

It’s Not Just Twitter’s Problem: What Insurers Need to Know about DDoS and the Snake in the IoT Garden of Eden

It’s Not Just Twitter’s Problem: What Insurers Need to Know about DDoS and the Snake in the IoT Garden of Eden

On Friday October 21 a massive Distributed Denial of Service (DDoS) made over 1,000 websites unreachable, including, Twitter, Netflix and PayPal. Two cloud providers, Amazon Web Services and Heroku reportedly also experienced periods of unavailability.

The attack was directed against a key part of the internet’s infrastructure, a domain name system provider, Dynamic Network Services aka Dyn. When a person enters a web address into a browser, such as google.com, the browser in turn needs an IP address (a string of numbers and periods) to actually connect with that web address. Domain name system providers are a critical source of IP addresses.

On Friday Dyn was the target of perhaps the largest ever DDoS, when its site was overcome by tens of million of requests for IP addresses. Because Dyn could not provide the correct IP addresses for Twitter and the other affected sites, those sites became unreachable for much of the day.

It also appears that the DDoS was mounted using a widely available malware program called Mirai. Mirai searches the web for IoT connected devices (such as digital video recorders and IP cameras) whose admin systems which can be captured using simple default user names and passwords, such as ADMIN and 12345. Mirai can then mobilize those devices into a botnet which executes a directed DDoS attack.

There are a number of potentially serious implications for insurers:

  • An insurer with a Connected Home or Connected Business IoT initiative that provides discounts for web-connected security systems, moisture detectors, smart locks, etc. may be subsidizing the purchase of devices which could be enlisted in a botnet attack on a variety of targets. This could expose both the policyholder and the insurer providing the discounts to a variety of potential losses.
  • If the same type of safety and security devices are disabled by malware, homeowners and property insurers may have increased and unanticipated losses.
  • As insurers continue to migrate their front-end and back-office systems to the cloud, the availability of those systems to customers, producers, and internal staff may drop below acceptable levels for certain periods of time.

The Internet of Things will change insurance and society in many positive ways. But the means used to mount the October 21 attack highlights vulnerabilities that insurers must recognize as they build their IoT plans and initiatives.