For over a decade we have pretended to be paperless. We celebrate the fact that the filing cabinets, the 7-part specialized file folders and huge mailrooms have all been eliminated and downsized, claiming that we are paperless. But we know that’s not true. Today’s paper is PDF files, Excel and Adobe. The filing cabinets have been replaced with digital folders and the mail rooms with emails and digital workflows. But in truth, we have been kidding ourselves. Insurance is not paperless; it just pretends to be. Yet it doesn’t have to be that way. The technology to become truly digital exists. We just need to take the plunge.
One of the biggest obstacles to being truly digital as opposed to being a digital paper industry involves the initial ingestion or digitization of data. We have had advanced OCR and computer vision solutions for a while. These have been excellent at extracting the information from digital forms and standardized templates but have not been sufficient to meet the needs of more complex businesses such as commercial insurance filings.
The typical commercial insurance inquiry or quote request may include an application, loss runs, value statement, certificate of insurance, financial statements and many other documents depending on the type of insurance. A typical commercial insurance policy will contain 300-500 details. Information invaluable to understanding, evaluating and quoting a business.
The untapped potential of dark data
Our processes today for extracting data from these submissions are archaic. A typical process involves routing the submission to a cheaper resource, often offshore, that will extract a minimum of fields to set up the submission and some basic grading information. On a good day, they can extract and convert 50 of the 500 pieces of information into digital data by feeding it into the system. The rest remains in the documents as dark data. Data that carriers have, but are never digitally exposed or accessible. Then the electronic file with the electronic documents is sent to the insurer where these digital documents are opened again and again because the information is not available. Except the file folder and documents are made of bits and bytes rather than paper and ink, it̵7;s the same process as 300 years ago.
It doesn’t have to be that way. We have seen what insurance can become with speed, efficiency and precision when the process is digital with simpler and homogeneous risks on personal lines, but the promise is there for more complex insurance such as group benefits, commercial lines and specialty insurance. And it starts with being able to enter the data digitally.
And this is where we have seen a technological leap. With the integration of 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 has implemented an intelligent risk control system that enables end-to-end automation of insurance applications. (Page 11, Fuel the future of insurance)
Learn from the emerging leaders
One of the other emerging leaders in this field is a company called MEA from the UK. What makes MEA unique is that it was founded by insurance executives who understand the unique challenges involved in complex insurance documents as well as a key understanding of the terminology, variety and complexity involved. Their solution has specifically focused on building deep expertise and a broad insurance-specific mining catalog around core insurance concepts, starting with submission documents that allow their solution to be very quickly adapted to new insurance areas. The best part is that because their team has a deep understanding of insurance, working with them doesn’t require you to educate their team on what insurance means.
We have worked with MEA on several assignments and tests throughout Europe and the USA. The breadth of their solution has allowed us to evaluate a wide range of industries, business processes and insurance entities, including carriers, MGAs and brokers. What we have found is that they can consistently compete in terms of speed, accuracy and quality of their testing and execution. It is certainly possible to go from evaluation to use of this type of solution within a few short months.
So, what does this mean for our digital paper world today? Well, that means insurance companies now have a real choice to start a digital journey. This has been the hope and dream for a while, but technology has really caught up with that vision of being digital – starting with intelligent intake.
Create truly contactless processes
There are several different ways to use it now. It starts with identifying a pseudo-paperless process that exists in your organization today and targeting the documents it receives. Submissions are an obvious choice, but claims, bordereaux, invoice receipts, audits, etc. are all also possible. Then design how you want the digital process to work. You can choose to ingest and directly process the data or 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 with implementing it, but in the long term you should expect that at least some of your intake will be able to be contactless. The second decision to make is whether to extract only the data you use today or whether you want to extract everything in the document. This is the 50 vs 500 question for submissions. But doing so may require some other changes and other technologies to facilitate a true digital transformation. We will discuss these elements in a future blog.
But in the meantime, isn’t it about time your insurance process was no longer 17th century? Isn’t it time we move from sending the digital paper in email and workflow systems to building truly digital processes? Isn’t it time to start building your company’s intelligent intake solution? Let’s start building real digital insurance.
Fuel the future of insurance: Technology modernization, such as AI and cloud-powered data analytics, is helping insurance companies deliver profitable growth both through increased revenue and reduced costs.