Is Your Insurance Business Missing a Critical Decision Window When it Comes to AI?

By: | February 11, 2019

Craig Bedell ARM is an Executive Member of IBM’s Global Insurance Industry Leadership Team. With a unique mix of insurance business and technology expertise he is regarded as a global expert in optimizing people, process and technology in insurance and risk management. An author, blogger and public speaker, Craig enjoys sharing thought leadership. He can be reached at [email protected]

Recently, I co-authored a whitepaper with my good friend James Taylor of Decision Management Solutions, in which I stated that I believe, over the next 18 to 24 months, you have a window of opportunity to transform the decision-making of your insurance company. If you do not, the delays, frustrations, missed opportunities and even the success of investments into great insights will continue to ultimately “miss their mark.”

The point of view I have been sharing with just about anyone who will listen is that I believe the return on investment for analytics, AI and even innovation in general is throttled by the maturity level of the business decision-making processes to which these are being applied.

Said differently, to straighten out the decision-making path — whether underwriting, pricing, claims or other insurance process — an organization needs to assess the current underlying processes, decision points and determine what really matters to the final accurate outcome. Those decision-making processes that have been optimized will naturally be better able to consume new insights and allow for the retirement of other decision points that improved insights afford.

I like to emphasize, at this point of the conversation, that adding another step in an already complicated decision-making process only adds to the inefficiency.

So why the urgency in my forecast?

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I believe most insurance companies have hit a critical point in time with regards to their investments in analytics, innovation and even AI, where business leaders are measuring more critically the “success” of programs to date by what they have contributed to the bottom line of the organization. I am seeing innovation and analytics groups struggling, not for the lack of developing new insights, but rather because their insights are not being adapted into the day-to-day decision-making processes of the company to really make the differences they promise.

Don’t get me wrong; there have been wonderful new insights developed by many imaginative individuals and teams. I’ve seen examples of new risk scores, claims severity predictors, customer behavior analytics insights, fraud and claims leakage measures just to name a few. But for every efficient employment (note I didn’t just type “deployment”) there have been too many examples where these insights have gone under-utilized.

I believe that most insurance companies have hit a critical point in time with regards their investments in analytics, innovation and even AI where business leaders are measuring more critically the “success” of programs to date by what they have contributed to the bottom line of the organization.

There are the beginnings of pent frustration occurring on the part of business sponsors, innovation teams and IT. It is quite obvious to me as I visit with insurers across the globe that the vast majority of professionals recognize the potential value of new insights. They also agree with me when I say that insights are worthless unless they are acted upon.

Even more important, people seem to uniformly agree with me when I point out that fundamentally, as an industry, we have not put enough attention on the basic operational decision-making processes to modernize them.

Those firms that have are seeing a dramatic return on their investments in analytics, AI and innovation. Those that ignore the obvious will lag. &

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