ISB Hyderabad - Team Prodigo

Apurva Agarwal, Varshaa Singhal

Disruptive Innovation In Insurance
Current Process Flow Proposed Technical Solution

Insurance Application Blockchain: Data Records Health & Property

AI & RPA: Underwriting & Smart Contracts
Third Party Underwriting IoT: Site Inspection & Usage Based Insurance
Bundle Policy with Risk Mitigation Reduce Payouts
Policy Issuance

AI, RPA & Machine Learning: Virtual claim adjustor,

Loss Incident Fraud Detection
IoT: Property damage claims, validating claims via data
from sensor devices
Claim initiation

Third party Inspection AI & RPA: Reduction of claim documents, instant

settlements, online interfaces, self learning ability
IoT: Faster Renewals basis the older data from devices
Settlement
IoT in Issuance, Claims & Risk Mitigation
Home Insurance Health & Auto Insurance
Issuance & Claims Issuance & Claims
Site Inspection via Drones both for insurance processing and Usage based insurance (UBI) better risk premium pricing pay
for damage claims what you risk
40-50% cost reduction in adjudicators work1 Validating claims from the data received from
the IoT devices

Bundle Policy with Risk Mitigation Bundle Policy with Risk Mitigations
Sensorised loss prevention technology Fitness devices/ Driving sensory trackers
Home surveillance devices to monitor and alarm
Risk prevention leads to lesser Claims Reduce unhealthy lifestyle and bad driving
lesser claims

Economic Impact2 Economic Impact3

Cost Category 2016 2017 Expected Reduction Cost Category 2016 2017 Expected Reduction
Claim Payout $3200 $3400 20% Claim Payout $3200 $3400 30%
Third Party Services $1160 $1900 40% Claim Processing $400 $700 20%

Approximate Investment in IoT4 = $10000 ; YOY $ Savings = $1500+

AI & RPA for Claim Processing, Management, Underwriting
RPA benefits - Reduction of claims documents
processing team, thus lesser costs
Self learning ability - Make model more adept
with every new case
Fraud detection via Smart Contracts : Cognitive AI to analyze & interpret
Settle claims - Online interfaces & virtual claims
Using Modelling, rules, text mining & data comprehensive data from Block-
adjusters
searches Claim chain1
Instant & Efficient Claim Settlement2 Customer risk profiling, compliance,
Faster Renewals of Health & Car using
Processing
preventing miss-selling
Block-chain data Reducing costs of Underwriting
Claim
Underwriting
Management

% of Tasks that are automable

Expected Job %
Cost Category 5 2016 2017 Reduction6 Insurance Agent 60%
Third Party Services $1160 $1900 40%
Underwriter 35%
Claim Processing $400 $700 60%
Claim Adjusters 26%
Actuaries 15%
Source :Nov'15, McKinsey Quarterly Article

Approximate Investment in AI & RPA7 = $5000 ; YOY $ Savings = $1180

Blockchain for Data Extraction & Fraud Prevention
Record Keeping & Data extraction Claim Issuance & Fraud Prevention
Blockchains are cryptographic ledgers which verify every With the Blockchain framework, providers need not submit
transaction using Bitcoin Tokens electronic/ physical claims to insurer post provision of healthcare
Interoperable & Comprehensive health ( for health& life service low claim processing costs, no use of third party
insurance) & site ( for home insurance) data records Solves the problem of verifiable data via Third Party, and thus
lesser issuance costs fraud prevention

Insurer process payment basis smart contract once patient gets discharge code in
Smart Contract patient block chain data
Client Private key Insurer

Patient admit in hospital for medical service

Hospital

Block chain Patient data

Data stored in IT system Standard data fields & Patients public id Each transaction is stored on block-chain,
are redirected to block-chain via APIs containing patients public (non-identifiable) ID

Approximate Investment in Blockchain8 = $5000 ; YOY $ Savings9 = $800

Priority Road Map & Third Party Selection
Priority implementation Road Map
IoT - 1st Priority (as already being used in Insurance Industry)
a. Usage based insurance pricing in health using fitness bands & in auto using sensory trackers Total Investments expected in
b. Sensorised loss prevention devices in home insurance leading to lesser claims IoT, Blockchain & AI:
$20,000
AI & RPA - 2nd Priority (as many stages are still in development phase)
a. Lower costs of underwriting : Using AI in Customer risk profiling, compliance, preventing Activities Impacted:
miss-selling Claim Issuance (Data records
b. Instant & Efficient Claim Settlement with fraud detection using smart contracts extraction)
c. Faster Renewals of Health & Car using Block-chain data Claim Processing (Virtual Claim
adjusters)
Blockchain 3rd Priority (as this is still in nascent stage, experimental) Claim Settlement (Removing third
a. Extracting data from national health records to be used in issuance in health insurance party)
b. Site/ Property records data via blockchain to be used in home insurance Loss Prevention (IoT devices &
c. No need for physical/electronic claims post healthcare service, direct data pull by UBI)
blockchain
Estimated Yearly Savings:
$5000 * increased number of
Third Party Selection Parameters:
policy issuance (revenue) 10X
Usage of IoT in Site Inspection for insurance processing, damage claims & claim verification
= $ 50,000
Usage of AI & RPA in settling claims - Online interfaces & virtual claims adjusters
which have a self learning ability
Using data from block chain for health records & site records, and further in claim settlement
Faster & efficient technology enabled processed which have least manual intervention
Appendix Data sources & Assumptions

1 - As per Cognizants report: Drones will make insurance adjusters work flow 40%-50% more efficient.
2- https://www.techemergence.com/artificial-intelligence-in-insurance-trends/
3 - http://www.businessinsider.com/internet-of-things-insurance-home-life-auto-trends-2016-10?IR=T
4 Assumptions The savings & investment figures have been conservatively extracted using the data on automation in processing &
less claims filing
5. AI system based on IBM Japan Ltd.'s Watson, a "cognitive technology that can think like a human," and "can analyze and interpret all
of your data, including unstructured text, images, audio and video." The AI system will be tasked with reading medical certificates
written by doctors and other documents to collect information necessary for making payouts, such as medical histories, length of
hospital stays, and surgical procedure names.
6. Lemonades AI Jim made headlines in January 2017 by purportedly settling a claim in less than three seconds.
7. https://research.nelson-hall.com/blogs-webcasts/nelsonhall-blog/?avpage-views=blog&type=post&post_id=554
8. https://www.pwc.co.uk/financial-services/fintech/assets/blockchain-in-insurance.pdf
9. https://assets.kpmg.com/content/dam/kpmg/xx/pdf/2017/01/blockchain-accelerates-insurance-transformation-fs.pdf