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©2015 IBM Corporation1 19 October 2015
Your cognitive future in the insurance industry
Understanding customers and risk
©2015 IBM Corporation2
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
©2015 IBM Corporation3
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
©2015 IBM Corporation4
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%
©2015 IBM Corporation5
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
©2015 IBM Corporation6
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
45%
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
©2015 IBM Corporation7
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
©2015 IBM Corporation8
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 198%
13%
28%
55%
0%
20%
40%
60%
1-2yrs 3-4 yrs >= 5 yrs
©2015 IBM Corporation9
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 Bedell
Global Insurance Executive
IBM Sales & Distribution
Christian Bieck
Global Insurance Leader
IBM Institute for Business Value
John Franzis
Insurance Industry Leader
IBM’s Watson Group
Anthony Marshall
Research Director and Strategy Leader
IBM Institute for Business Value
Dr. Sandipan Sarkar
Cognitive Computing Leader
IBM Institute for Business Value
