Customer onboarding is an easy UX trick for Insurtech, but claims processing requires some hard AI tech

A Singapore Insurance incumbent called NTUC Income has announced that it is using IBM Watson AI to change the claims process experience.

A lot of the traction for Insurtech ventures is changing the cost/speed/convenience of the customer onboarding experience. That is certainly valuable. For some types of low ticket item insurance, it is a game-changer. You only bother with low ticket item insurance if it is cheap and fast.

However, what really matters to consumers and so what will move the Net Promotor Score needle is the claims process. That is what drives rants (“the expletive deleted took ages and made my life hell”) and raves (“definitely recommend them, when xyz happened they paid promptly and without any hassle”).

Changing the claims process is hard. The journey has to start with a strategic vision from the top to make claims processing into a source of competitive advantage (in other words, to avoid being yet anther claims avoidance company).

Then the hard work starts.

Artificial Intelligence in the real world

In our introduction to Artificial Intelligence Week on Daily Fintech back in March 2016 we wrote that the “commercial rollouts of AI need a magic quadrant of:

• Technically feasible.

• A good ROI from replacing humans and improving predictability.”

What is interesting about the NTUC Income story is that it is not just about cutting costs. It is also about changing the user experience.

From their Press Release:

“Income receives an average of 14,000 hard copies of IncomeShield pre- and post-hospitalisation claims monthly, which are currently reviewed, assessed and approved manually. This contributes to a significant number of man-hours spent on data entry before claims data can be processed to enable pay-outs.

To address this challenge, Income is using IBM Datacap to better manage claims that are received in a variety of media types. Datacap combines advanced imaging, business rules, natural language processing and machine-learning technologies to automatically classify and extract information in real-time from most types of documents, thereby eliminating labour-intensive manual data entry from paper claims.

For the processing of data, Income is using IBM Watson Explorer, a cognitive search and content analysis platform at different stages of the insurance lifecycle. It can read and analyse structured and unstructured data, such as medical certificates and bills. The length of hospital stays, medical histories, surgical procedures, and other contributing factors are then taken into consideration by the system before it makes claims recommendations and calculates the pay-outs to policyholders. This will reduce the time claims assessors spend researching and matching claims information. Overall, it is anticipated to improve the quality and speed of the decision-making process as well as the consistency of the claims experience for policyholders.”

The company is planning for growth based on demographics – more health claims from an ageing population in Singapore. American, Japanese and European health insurance should take note.

Dancing Elephants

Incumbents are supposed to be slow moving elephants that agile startups can run rings around. That narrative plays out in banking, but not so much in Insurance. Many times we have found Insurance incumbents innovating at digital speed.

NTUC Income has innovated before:

“In October 2016, Income revolutionised the motor insurance industry with the introduction of two innovative motor insurance schemes – Drive Master and FlexiMileage – that leverage telematics to personalise insurance based on an individual’s driving behaviour.

The Singapore Insurtech story

This is another story of Insurtech innovation from Singapore. We recently also covered CXA Group.

Coop = Social in Purpose, Commercial in Approach

NTUC Income is a Coop. To American ears that sounds almost socialist. However think about what drives digital innovation -customer centricity, customer first, customer experience. That has to be at odds with a shareholder first approach. As they put it:

“NTUC Income (Income) was made different from the start. Founded in 1970 to provide affordable insurance for workers in Singapore, our mission has always been to maximise value for customers above profits for shareholders.”

Their motto is “Social in Purpose, Commercial in Approach”

The strategic vision from the top to make claims processing into a source of competitive advantage is a lot easier if you only have one master to serve – the customer.

The future is digital. The future is also coop. Welcome to the digital coop.

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Bernard Lunn is a Fintech deal-maker, investor and thought-leader.

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