Insurance Industry and the next Industrial revolution

Originally posted on My Inner Voice Blog by Miha Ahronovitz   Click to follow Miha

At World Economic Forum in Davos 2016, this picture feels grandiose

3 key questions for the digital revolution, by Jim Snabe, WEF USA

According to Harvard Business Review , the article Is Your Organization Ready for Total Digitization? explains:

What do the following items have in common: credit cards and streaming or recorded music, robots for production, CAD systems, telephone networks, digital games, computers in products like cars and vacuum cleaners, sensors, and video consoles used in remote mining? Answer: They are all digital and connectable.

This is the world of total digitization: a multitude of digital devices and sensors creating streams of data, as well as any number of digital services and products for both internal and external use, distributed throughout the enterprise, and sometimes, but not always, connected.

However the road to the 4th industrial has the devils in the details.

The amazing challenges of digitization the life insurance industry

This is an industry that bills total premiums of 2.3 trillions dollars per year worldwide As part of the work we did in Cooldimi we discovered  some interesting facts

Insurance documents are verbose and complex

On average insurance products come with “more than 25,669 words of explanation written in PhD level language.” This is more than Shakespeare’s Romeo and Juliet . See Customers ‘only read 15%’ of insurance documents they receive‘ . One of the big enemies for getting the right cover is complexity.

There two startups trying to bring life insurance on line.   Quilt coming soon

“Quilt is for people who live online, value what they have, and expect more from their insurance. We promise: we’ll never make you read pages of legalese or hound you with calls from salesy agents”.

Another is PolicyGenius that compares life, renters, pet and health insurance on line. Their mere existence is a proof of Insurtech 3rd party disruption, I see why their methods can not be adapted gradually in all incsurance industry

No national databases of all life insurance policies

This is unthinkable
The following article has a self-explanatory title: 12 Easy Steps To Locating Lost Life Insurance Policy Documents. Quote:

Locating life insurance documents for a deceased relative can be a daunting task—for one thing, as of this moment there are no national databases of all life insurance policies.

There are reports of over 1 billion dollars in  unclaimed life insurance – accumulated over the years in US alone.

The role of human happiness in selling insurance products

Why are people reluctant to buy life insurance?

From a millennial (someone in her mid 30’s) Quora contributor

People are often reluctant to join a plan that provides no immediate benefit. Not only does life insurance not provide an immediate benefit, but it doesn’t provide any at all as long as you are alive. It’s likely that many people are turned off by the idea that they will not personally benefit from having a life insurance policy.

There are people who have an intense fear of their own death. It’s not that any of us are somehow okay with that prospect, but some people fear it to the degree that they don’t want to talk about it, and don’t want to plan for it either. Some might even believe that planning for their own death, such as buying life insurance, is like willing it to happen

Jewish orthodox people (and many other religions) believe our life is sustained by Gd and we could  trust  a life insurance policy the way we trust Gd.  According to Rabbi Alan Yuter

The head of the household viewed children as old age insurance; children were expected to care for the mother in old age. Life insurance fills this social need. The marriage document is at its core a life insurance policy which the wife collects at her husband’s demise or at her divorce, i.e., the demise of the marriage.

For Hebrew culture, love requires tangible expression. This expression includes giving financial and emotional securityfor those who depend upon us.

These sentiments are attached to the product called life insurance.  Simply lowering the price of the product will not make it more desirable

Happiness  Index

The 4th Industrial revolution will not happen, unless we digitize  the human sentiments in addition to credit cards, life insurance, and other soulless infrastructure objects.  Using machine learning and sentiment analysis, we should always have a clearer picture of the buyers and sellers happiness. See the blog  Happiness in Business

Measuring happiness is not an interview process. People are not entirely honest in interviews, and the samples are too small.

Cooldimi translates and monitors continuously the Sentiment Analysis from   business data into a  Happiness Index , per product, line of business, geography or society impact. We detect the polarity (negative, neutral, or positive sentiments) in real time using Natural Language Processing (NLP).

Otherwise the barriers between man and machine won’t dissolve.


Post Script

Amazon started using machine learning in consumer products reviews evaluation. Just click the stars in any review like this, and this text pops up.

Amazon calculates a product’s star ratings using a machine learned model instead of a raw data average. The machine learned model takes into account factors including: the age of a review, helpfulness votes by customers and whether the reviews are from verified purchases

If Amazon stopped calculating simply raw averages in rating, everyone will follow soon. Behind each human rating, there is a sentiment: joy, envy, maliciousness, sincerity, fanaticism and so on…
By | 2016-11-04T21:40:38+00:00 October 18th, 2016|Categories: Industry News|