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Your cognitive future in the insurance industryUnderstanding customers and risk
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The insurance industry is facing a broad range of disruptive forces
Rapid digitization
Rising customer expectations
Economic environment
Sophisticated fraud
Digitization is creating new modes of interaction and unprecedented connectedness, with increases in unstructured data from disparate sources
The new generation of customer expects individualization, responsiveness, integration and seamless experiences1
Economic volatility and a challenging investment environment is adversely affecting the insurance sector and eroding profit margins
Incidence, sophistication and severity of fraud is increasing
Changing demographicsBaby boomers are nearing retirement and millennials are impacting business across the board, from products to interactions
$
Source: IBM Institute for Business Value Analysis 2015
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To navigate these forces, successful insurers need to excel in the three pursuits Engage, Discover and Decide
Engage DecideDiscover
Outperformers are 65% more competent in customer
engagement than underperformers
66% more outperformers are strong in decision making
50% Outperformers
13% Underperformers
285% more outperformers make innovation a major priority
Source: IBM Institute for Business Value Analysis 2015
66% Outperformers
40% Underperformers
68% Outperformers
41% Underperformers
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Customers demand speed, transparency and personal interaction – but many insurers struggle to meet it
…of insurance CXOs agree customers demand more personalized experiences
Engage
Industry need1
Major areas in which insurers are not competent enough in delivering customer service
Achievement gap2
How can insurers engage customers better, faster and more personalized?The key question
Personalized experience
Self service
Addressing concerns with speed
53%
56%
63%
72%
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Insurers have limited capability in innovation and struggle to translate insight into innovation
… of insurance CXOs are actively pursuing industry model innovation
Discover
Industry need Achievement gap
Key roadblocks to pursuing disruptive innovation
Insufficient business case/ modelling skills
Insufficient buy-in from management
Insufficient skilled resources
Customers reservations to new possibilities
65%
52%
52%
51%
50%
How can insurers free themselves from the contraints of traditional capabilities and foster innovation?
The key question
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Insurance executives lack confidence in making strategic and cost reduction decisions
Decide
Industry need Achievement gap
… of insurance executives are not
confident in taking cost reduction decisions
⅔… of insurance executives are not confident in taking
strategic business decisions
15
21
13
51
17
23
14
46
+12%
+13%
+7%
-10%
Control
Decision support
Management
Transaction
Comparison of maturity levels for Insurance finance and actuarial groups
FSS BAO Level 3
FSS BAO Level 4&5
What capabilities can help insurers make correct and timely decisions efficiently?The key question
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Cognitive computing can provide a foundation for insurers to overcome these challenges
Engage DecideDiscover
Acts as a tireless agent providing expert assistance to human users
Carries a conversation naturally, e.g. in human language
Understands consumers from past history and enriches interactions with context- and evidence-based reasoning
Helps people discover insights far above human levels
Finds insights and connections, understands the vast amounts of information available
Visualizes possibilities and validates theories like experts
Offers evidence-based recommendations
Evolves continually towards more accuracy based on new information, outcomes, and actions
Provides traceability to audit why a particular decision is made
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Insurance executives believe cognitive computing will disrupt the insurance industry – and they plan to make cognitive investments
85%… of insurance executives believe cognitive computing will play a critical role in the future of their business1
Most insurance executives say they plan to invest in it2
Sources: IBM Institute for Business Value Cognitive Computing Survey (Q22,Q23) 2015, Insurance data
… of insurance executives believe that it will play a disruptive role in the insurance industry 1
98%
1-2yrs 3-4 yrs >= 5 yrs0%
10%20%30%40%50%60%
13%
28%
55%
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To learn how your organization can use cognitive computing to open up opportunities in the insurance industry, please contact:
Visit our website to read full report on this topic:
ibm.biz/cognitiveinsuranceibv
Contact study authors
Craig BedellGlobal Insurance ExecutiveIBM Sales & [email protected]
Christian BieckGlobal Insurance LeaderIBM Institute for Business [email protected]
John FranzisInsurance Industry LeaderIBM’s Watson [email protected]
Anthony MarshallResearch Director and Strategy LeaderIBM Institute for Business [email protected]
Dr. Sandipan SarkarCognitive Computing LeaderIBM Institute for Business [email protected]