Canadian Underwriter

From AI to VR: The future is now

February 22, 2017   by Brooke Smith

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A contract and a handshake have long been the way the insurance industry has operated. And while those cordial business deals still remain, new technologies are causing insurers and brokers to think how the industry will change and what it means for them. Artificial Intelligence (AI), the Internet of Things, virtual reality and marketing technology automation are just four technologies that are making headway in the insurance world.

With more private information at an insurer’s fingertips, and with the capability to aggregate it, “you essentially have a 360-degree view of a potential customer,” says Behzad Salehoun, co-founder of, speaking about marketing technology automation. “This would allow the insurer to create a profile of potential customers, including basic demographic and psychographic information, all based on structured and unstructured data available, like from Facebook posts and Tweets,” he says, ultimately allowing an insurer to create a personalized one-to-one marketing message.

Mitchell & Whale Insurance Brokers Ltd. is currently customizing its own marketing technology, which it refers to as trigger point marketing. “We find triggers of times and places to be sending people information, whether that’s on their birthday or anniversary, or whether they bought or a new car or got rid of a car,” says Adam Mitchell, president of Mitchell & Whale. “You want to send an incredibly relevant message to a very specific person at the very time they need it.”

Intelligent brokering

Mitchell & Whale is also making headway with AI— particularly in the form of the chatbot, a computer program designed to simulate conversations with humans via voice or text. It’s currently in beta form on the insurer’s website. “It mostly recognizes direct language,” says Mitchell. “It can set up a call for you with a broker, take a change request or give you a quote on insurance.” He sees this as the new way to get around a website instead of searching on the site, finding what you need and then reading the information.

How crazy is it that I can have a conversation with my vehicle while driving down the road, and Siri can tell me how the Leafs are doing… Why can’t we apply that to insurance?”

Adam Hare, vice-president of Insurance Jack, loves the technology with bots. “How crazy is it that I can have a conversation with my vehicle while driving down the road, and Siri can tell me how the Leafs are doing or how certain stocks are performing? Why can’t we apply that to insurance?” he says. “Why can’t we ask, ‘When is my next insurance payment due?’ or ‘Can you quote me on a new vehicle?’ instead of having to pick up the phone and call someone?”

Virtual and beyond

While Salehoun isn’t sure if insurance will catch up with virtual reality, its hybrid – augmented reality – is already here. “With augmented reality you overlay or supplement the view of the real world with computer-generated input like video, graphics or sound,” explains Salehoun. “You can envision an adjustor or claims manager being out in the field after a disaster accessing information, including live video feeds from a drone to survey the property, right from their AR head gear while they’re on-site.”

In addition, drones are being used for roof inspections, “so I don’t have to send somebody up a ladder anymore,” adds Mitchell. He also sees virtual reality playing a role in all kinds of training, such as safety training or driver training, at a very low cost or a walkthrough of a factory or site showing the whole interactive piece. “It’s happened in real estate already,” he says. “So why wouldn’t it happen in insurance risk?”

While the Internet of Things, where everyday objects have connectivity to the Internet, may not be a tool insurers could use to help them, it could potentially affect how they insure. “With [a person’s] ability to understand what’s going on in the environment, how things are working and what might have gone wrong, that probably changes the dynamics of every way in which a home is insured,” says Mitch Joel, president of Mirum. Hare agrees. “Devices are going to become a lot more expensive. But if people are spending more money on this technology, like a fridge that can talk to you and recommend items for purchase, will a basic policy continue to cover all of these things?”

Changes ahead

Still, all this technology poses a concern for some. “We’re wondering how deep to invest in this,” says Mitchell. “Can we actually get out ahead of it fast enough and far enough to stay relevant in insurance, or will the great Google come out with an open source that’s just as good after we’ve spent $500,000, and can’t get it back? We’re not exactly sure which way to go.”

The percentage of customer interactions managed with no human by 2020.

Source: Gartner

200 billion
The projected number of Internet of Things objects by 2020, compared to two billion in 2006.

Source: IDC, Intel, United Nations

The percentage of Canadian CEOs concerned whether they are keeping current with new technologies.

Source: KPMG 2016 Canadian CEO Outlook

And there are questions around technology in driverless cars, in particular. “Who’s to blame? The manufacturer or the developer or the camera that malfunctions? Who’s going to find fault in this?” Mitchell asks. He notes that companies like Volvo are saying it will self-insure every car it puts out, which will likely threaten distribution and most insurance companies.

Similarly, with all this tech, is it the end of the human, at least in terms of job loss? Research by Oxford University in 2013 suggested nearly half of all jobs in the United States were at risk of being automated in the next 20 years. Hare says he’s talked with brokers that have been working on AI technology solutions. These companies claim that within three to five years they’ll be able to make significant cuts to the size of their traditional service teams.

However, Hare remains positive that these technologies will create new roles in marketing and technology to help insurers talk about the new products better.

On the bright side, there may be opportunities for insuring smaller niche products, instead of the typical big-picture insurance on home and auto.

“People like buying specific things, and now with the amount of technology that sits on iPads and iPhones, people have a sense of wanting to protect those things,” Hare says.

Predicting the future

There’s nothing like predicting the future. With predictive analytics, insurers can leverage their historic claims information and use it to make predictions (for example, whether a claim may go to litigation) about new claims.

“It’s one more way we can provide customer service to our insurance and broker partners,” says Laila Brabander, senior vice-president and head of claims for Chubb in Canada. “It allows us to mine claims data so we can help our insurers map out and forecast risk scenarios.”

While Chubb has been using predictive analytics in the U.S. for about 10 years, it’s relatively new in Canada. “We’ve actually just embarked on it in the last 18 months or so,” says Scott Henck, senior vice-president of global claims with Chubb. “And one of the key areas we’re focusing on, certainly in Canada, is text analytics.”

Text analytics mines data from claim notes (i.e., the information adjusters or claimants send, such as photos, motions and documents) to find patterns and trends. Claim notes tend to be very large, notes Henck, so the technology “allows us to be able to consolidate all of that information in one place and very quickly access it and, in real time, do inquiries that, even five years ago, would have been impossible.”

In the U.S., Henck says Chubb is further leveraging text analytics and working it directly into the individual claim file. For example, with a first notice of loss – say on a casualty claim (a slip and fall) – there’s basically an average cost for it. However, text analytics can provide a number of other factors, such as whether there was a pre-existing condition or circumstance around the venue. “We can synthesize a number of factors and be able to tell our adjustors this [claim] is likely to be well below average or well above average and here’s why,” he explains. “We can arm them with information to help be able to get the best outcome of the claim for our customers.”

Currently, Chubb is looking into speech analytics, which can not only converted speech to text but also decipher the sentiment and tone of speech. “We can understand that there’s a challenging conversation going on and be able to alert our claims rep that there’s something they need to pay close attention to,” he explained.

“We don’t currently use [speech analytics] in our process, but we see it on the horizon in the next few years.”

Copyright © 2017 Transcontinental Media G.P. This article first appeared in the January/February 2017 edition of Canadian Insurance Top Broker magazine

This story was originally published by Canadian Insurance Top Broker.