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The insurance industry needs social media data

The insurance industry needs social media data

In the era of 24-hour news coverage, and in the aftermath of highly publicized catastrophic events including hurricanes, earthquakes and terrorist attacks, insurance policyholders have very little patience for a protracted claims process.

At the risk of alienating customers, especially younger policyholders who grew up in a digital age, the insurance industry must adapt to keep up with the speed of business and increased expectations regarding how companies administer claims.

Consumer expectations aside, there’s also pressure from internal stakeholders who expect up-to-date evaluations of risk and more efficient business practices that drive down costs and create competitive advantages.

So, how can insurance companies redesign their business models, particularly the claims administration process?

Leveraging the wisdom of crowds

With these challenges in mind, innovative insurance companies increasingly see a reason to incorporate alternative data sources as an element of their insurance contracts. Given the prevalence of smartphones and the general public’s willingness to use their social media accounts to share events as they happen, real-time social media posts are often the fastest indications of a breaking event. In fact, governments, news agencies, and businesses commonly rely on social media to keep track of breaking news stories.

The real-time nature of social media dovetails with the need for insurance companies to pick up the pace when processing claims. When analyzed correctly, social media data can inform a parametrics insurance contract, triggering the payment of a predetermined amount when conditions exceed certain metrics, such as the wind speed associated with a hurricane or tremors accompanying an earthquake. In addition to natural disasters, alerts derived from social media could justify payouts of a parametric insurance policy covering a man-made event, such as a terrorist attack.

In short, when a significant incident impacts policyholders, a parametric contract that relies on social media alerts can generate a payment. And there’s an added bonus: After an event, the real-time information from social media becomes historical information that helps underwriters assess future policy risks.

A front-row seat to insured events as they unfold

As the recent hurricane in Puerto Rico or the 2017 terror attack in the Parson Green Underground station in London demonstrate, a spike in volume of real-time social media posts is a leading indicator of breaking news. In the simplest terms, social media posts emanating from Puerto Rico or in the vicinity of the Parson Green station provided compelling evidence of an incident. Over time, as the volume of posts grows, the evidence of a covered event becomes incontrovertible.

Nonetheless, insurance companies don’t need to wait until there’s a vast amount of social media posts to initiate the claims process. With the right tools in place to mine social media, insurance companies can be alerted to an event before the volume of posts surges exponentially.

Whether an insurance company relies on the first post to act or decides to wait until the volume of social media posts mushrooms, the corroborative nature of social media, including the analysis of geolocated posts, offers an up-to-date portrayal of events.

While incorporating alternative data as part of parametric insurance contracts may face organizational resistance, making use of social media data benefits those covered by policies, as well as the insurers themselves — removing the burden of assessing a loss solely off insurance adjusters and shortening the time needed to assess a loss and issue a payment. Customers who are helped quickly are also less likely to complain about service and may support the insurance company publicly, contributing to brand strength.

The rush to leverage social media alerts

Up until recently, the insurance industry has resisted the pressure to jump on the technology bandwagon. However, in the midst of unrelenting changes in consumer expectations, and the proliferation of online insurance upstarts determined to disrupt the industry, many insurance companies are in the process of overhauling their business models and embracing the latest technology.

In particular, the claims process is ripe for change. While the industry’s staid approach to claims used to suffice, today’s policyholders no longer deem it acceptable for insurance companies to take months to evaluate and pay out claims. In order to attract and retain customers, while reducing claims processing costs and creating competitive advantages over less refined competitors, insurance companies must build business models that allow for a faster, more agile response. That means looking beyond the traditional tools and approaches for a nimble solution with the potential to support the accelerated payouts policyholders expect.

Using alerts derived from social media provides claims processors with real-time, actionable alerts, including images and video that offer third-party evidence of an event and the extent of the damage, and consequently, the ability to expedite and automate policy payments. Insurance companies that tap into social media data to speed the claims process may impress policyholders by avoiding typical operational challenges and may help the strength of public brand perception.

The competitive landscape of shifting business models may propel many insurance companies to use social media data as an indispensable linchpin in their revamped claims administration process.

Source: Property Casualty 360

Author: Dillon Twombly

Realities and risks of the robot revolution

Realities and risks of the robot revolution

The robots are coming. In fact, in many places, they have already arrived.

Some consider software automation such as robo-advisors to be robotics, but there is also considerable progress in the world of the physical, tangible robots that are very similar to the ones made popular by a century of science fiction stories.

We are headed toward a future of robots all around us — on land, sea, and air; in our homes, businesses, and communities. Today, we are witnessing the first glimpses of this robot revolution. The rate of robot proliferation and adoption is astounding, which means that a future with billions of robots may not be that far off.

The International Federation of Robotics reports that there are expected to be 31 million household robots in service by 2019. There are already millions of industrial robots in use; over a quarter of a million were sold just last year. Add that to the millions of drones being sold and robots in business, agriculture, and other settings, and it becomes clear that robots are delivering good value and market acceptance.

Recent examples of robotics pilots and implementations demonstrate some of the future potential:

  • Takeout food delivery:  There are current pilots underway in which small mobile robots deliver takeout orders from restaurants in Washington, DC and Hamburg, Germany.
  • Robotic prostheses:  3D printing and AI advances have enabled low costs and customization of robotic arms, hands, and legs. Wearable robotic gloves that allow the disabled or elderly to have hand function are now available.
  • Robotic kitchen assistant:  A robot called Flippy has been proven to cook burgers at a fast food restaurant more efficiently and at less cost than humans.
  • Insurance sales:  Meiji Yasuda Life will use 100 humanoid robots in branch locations to answer sales and service questions and support sales personnel.

At issue now is how the new wave of robots will alter risks in the world and what that means for the insurance industry. It’s easy to jump to a vision of the world of the future controlled by robots, à la the Terminator movie series. But right now, Elon Musk, among other prominent tech figures, is truly worried about an AI apocalypse in which robots and other AI driven devices run amok and destroy the world and civilization as we know it.

While it is advisable and even imperative to think about these long-term possibilities and establish the right governance today, the truth is that robots are already affecting risks — both positively and negatively. Insurers should consider these aspects of a world with more and more robots:

  • Job loss:  Robots are likely to replace human workers in many different professions and in many different industries.
  • Worker safety:  Robots can operate in dangerous environments, where there may be toxic chemicals or otherwise unsafe conditions for humans. Robots can also work alongside humans, handling tasks that could help to reduce workplace injuries and accidents.
  • Elder/disabled care:  Robots in homes and healthcare settings may allow more individuals to live independent lives and reduce the need for assisted living facilities.
  • Increased cyber exposure:  Robots will collect and create vast amounts of data about the world around them. Like any other environment with electronic data, these will be subject to hacking and criminal abuse.
  • Robot-caused injuries:  Malfunctioning robots in industrial or residential settings could inadvertently cause injury or death to humans. There are examples of this already, and the potential increases as robots become pervasive.

It should be evident from these few examples that insurance coverages will need to evolve correspondingly. In some cases, the use of robots will decrease risks and can be leveraged for loss control. In other cases, new risks will emerge and will demand insurance solutions for individuals and businesses.

No one can predict with accuracy how rapidly robots will be adopted and spread across the world. But wise insurers will begin planning for a robot revolution, today.

Source: Property Casualty 360
Author: Mark Breading
Photo:  ShutterStock