We have been pretending to be paperless for over a decade. We praise the fact that the filing cabinets, the special seven-fold folders, and the massive mailrooms have all been eliminated and downsized, and claim that we are paperless. But we know it’s not real. Today’s work consists of PDFs, Excel and Adobe. The filing cabinets were replaced with digital folders and the mailrooms with emails and digital workflows. But in reality, we were fooling ourselves. Insurance is not paperless; it’s just pretending. However, it doesn’t have to be that way. The technology to go truly digital is there. We just have to take the plunge.
One of the biggest hurdles on the way to true digitalization as opposed to a digital paper industry is the initial capture or digitization of data. We have had advanced OCR and computer vision solutions for some time. These performed great at extracting information from digital forms and standardized templates, but were inadequate to meet the needs of more complex endeavors such as commercial insurance filing.
The typical submission or request for quote for a new commercial insurance business may include an application, loss reports, statements of value, certificates of insurance, financial reports, and many other documents, depending on the type of insurance. A typical commercial insurance application contains 300-500 pieces of information. Information invaluable for understanding, evaluating and quoting a deal.
The untapped potential of dark data
Our current methods for extracting the data from these inputs are outdated. A typical process is to route the submission to a lower cost resource, often overseas, which extracts a minimum set of fields to set up the submission and some basic scoring information. On a good day, they could extract 50 of the 500 pieces of information and convert it into digital data by entering it into the system. The rest remains in the documents as dark data. Data that network operators have but is never digitally disclosed or available. The electronic file containing the electronic documents is then sent to the underwriter, where these digital documents are repeatedly opened because the data is not available. Except that the file folder and documents are made of bits and bytes instead of paper and ink, it’s the same process as 300 years ago.
It doesn’t have to be that way. We have seen what insurance can become quickly, efficiently and precisely when the process is digital and the risks in private insurance are simpler and more homogeneous. However, there is promise for more complex insurance such as group benefits, commercial insurance and specialty insurance. And it starts with the fact that the data can be recorded digitally.
And here we have seen a leap in technology. By integrating more advanced machine learning tools that can combine natural language processing with computer vision, data can now be extracted from both structured and unstructured documents with high accuracy and speed. In fact, this is one of the hottest emerging technology areas in insurance today with a wide range of players and investors. Take the case of a life insurer in China that introduced an intelligent risk control system that enables end-to-end automation of insurance applications. (page 11, Drive the future of insurance)
Learn from the emerging leaders
One of the other emerging leaders in this space is a company called THING outside the UK. What makes MEA unique is that it was founded by insurance executives who understand the unique challenges of complex insurance documents and have a fundamental understanding of the associated terminology, variability and complexity. Their solution specifically focused on building deep domain expertise and a broad insurance-specific extraction catalog around core insurance concepts, starting with submission documents, allowing very rapid adaptation of their solution to new insurance areas. The best part is that you don’t need to train the team on what insurance means as their team is well versed in insurance.
We have worked with MEA on multiple deployments and tests across Europe and the USA. The breadth of their solution has allowed us to evaluate a wide range of business lines, business processes and insurance companies, including carriers, MGAs and brokers. We have found that they can consistently compete in the speed, accuracy and quality of their testing and execution. It is actually possible to go from evaluation to deployment of such a solution in just a few months.
So what does this mean for our digital paper world today? Well, that means insurers now have a real choice to embark on a digital journey. This has been the hope and dream for some time, but technology has actually embraced this vision of being digital – starting with intelligent recording.
Create truly contactless processes
There are now different ways to use it. It starts with identifying a pseudo-paperless process that exists in your organization today and targeting the documents it captures. Submissions are an obvious choice, but complaints, bordereaux, invoice receipts, audits, etc. are also possible. Then design how the digital process will work. You can collect the data and process it directly, or you can take a more cautious approach that still includes some level of human review or human insight. The choice should depend on the complexity and importance of the data and your comfort level with implementation. In the long term, however, you should expect that at least some of your data can be contactless. The other decision to make is whether you want to extract only the data you use today or whether you want to extract the entire contents of the document. This is the 50 vs. 500 question for submissions. However, achieving this may require some other changes and different technologies to support true digital transformation. We will discuss these elements in a future blog.
But isn’t it about time your insurance process no longer dates back to the 17th century? Isn’t it time to move from handing out digital paper in email and workflow systems to building truly digital processes? Isn’t it time to start building the smart recording solution for your business? Let’s start building true digital insurance.
Drive the future of insurance: Modernizing technology, such as AI and cloud-based data analytics, is helping insurers achieve profitable growth, both through increased revenue and cost reductions.
