By  , Marketing Associate

Advanced analytics in life insurance is all the rage. Insurers collect an abundant amount of data on their customers, but more often than not, this data slowly becomes dark data that is not leveraged. More specifically, an article by Deloitte predicts that by 2020, the total size of the digital universe will be 44 zettabytes (44 trillion gigabytes) — with 37% of that data not being used.

Insurers should see this untapped source (their dark data collecting dust in the corners of their systems) as a huge advantage and opportunity.

advanced analytics in life insurance

Derick Deleo, VP Professional Services

I decided to ask Derick Deleo, a 25-year enterprise content management vet, who recently joined Pyramid Solutions as our Vice President of Professional Services, about what this all means for insurers. His résumé has an impressive list of IT roles at some of the largest companies around the world – from Great American Insurance Group to IBM and their large client base of insurance companies.

Q (Taylor Trapani): There are rumors circulating that Amazon applied to sell insurance – both life and property and casualty – in 37 states. What does this tell you about the insurance industry, that a national e-commerce powerhouse is contemplating joining?

A (Derick Deleo): I can’t speak to whether that is true or not, but there definitely is a concern with Amazon – and even Google or Apple for that matter – easily joining the insurance industry. These companies have direct access to consumers, are capital rich, and have a lot of analytical intelligence about consumers. 

So what does this mean for insurance providers?

Insurance providers are at risk. These companies [Amazon, Google and Apple] have a competitive advantage because of the abundant amount of intelligence they have. Insurers also have a lot of intelligence about the insured but they’re still exploring how to leverage it. Amazon and the likes already know how to leverage it.

There’s a gap in the insurance industry then. 

Some may see it as a gap – we [Pyramid Solutions] see it as an opportunity.

Go on.

Think about the kind of information you provide to an insurer. Over the course of 10, 20, 30 years, an insurer collects a lot of data about you. Right now, this is where the process ends. Where opportunity lies is in applying advanced analytics to this data to better understand customers and evaluate risk. And maybe even further down the road, use this data to better the lives of the insured.

I’ll get back to your last point in a minute because you’ve piqued my interest, but I want to –

Am I just now piquing your interest? What, a 22-year-old doesn’t find insurance riveting?

Haha, not quite the adjective I’d use. I’ll give you “intriguing” for now.

Fair enough. I’ll take it. What were you going to ask?

I want to go back to how insurers can better leverage data. Can you elaborate on the opportunity you see here?

Yes, so, currently many insurers have fairly manual and extensive processes for collecting data to begin with. We [Pyramid Solutions] have the ability to capture information on paper and electronic documents. We want to extend that capability to be more intelligent. By that I mean, not only capture and extract information to the appropriate case, but that based on this data, the system of record can determine what the document is, what it’s referencing, and what to do next with the document – all without the need for a human to read the document.

Basically, put context around the data it pulls, rather than just strictly pull data based on rules and parameters?

Yes, exactly! They call it cognitive capture. IBM is at the forefront of delivering cognitive capture with technologies like IBM BigInsights for Apache Hadoop and Watson. With more intelligent systems, you can make more intelligent decisions.

What kinds of decisions? 

Identifying risk and fraud are the biggest things. We want to leverage Watson for more complicated analytics and predictive analytics to help carriers make these decisions.

Okay, I see where you’re going. I’m pickin’ up what you’re puttin’ down. I’m trackin’ like a VCR.

You know what a VCR is?

advanced analytics in life insuranceHey, I’m not that young. So going back to using data to improve the lives of the insured… 

Take the life insurance industry for example: What if insurers use data to bring value to the life side of life insurance? So many people wear a Fitbit or Apple Watch which constantly collects data about steps, exercise, heart rate, etc. Insurers could leverage this data and provide incentives, such as a medical policy discount, to customers that maintain a healthy lifestyle. I think this is where many insurers fall short: looking beyond the policy and claim. They need to consider ways to help the insured – to improve their lives while reducing the cost of their policies. It comes down to insurers learning how to apply advanced analytics (both predictive and historical) to learn more about their clients.

What’s something they’re missing right now that they should know about their clients?

Right now, millennials are the ones buying insurance, and they want that process to be virtual and fast. They don’t want to pick up the phone and wait for an agent to get back to them with several options in a few days. They want to go online and buy. If the provider interacts with them in that process somehow (through social media, email, etc.), that’s going to drive them to choose that provider. And this is where Amazon and Google have a huge advantage. This generation of consumers is also extremely social-aware. I’ve seen carriers publish community-type messages such as contributing to a disaster relief fund or employees working with inner-city students. This tactic is two-fold because it shows that the carrier looks out for the well-being of insured and it raises awareness about the carrier.

Yeah, for sure. Speaking as someone in Generation Y/a millennial, we get bombarded with advertisements all the time – especially on social media. What gets my attention are those more humanitarian stories and messages that aren’t as overt as “buy this.” I have a lot more respect and appreciation for companies that are subtle in their offerings by posts that improve my life like you said.
So all this being said, what do insurers need to think about if they want to develop an enterprise content management strategy that uses data?

If an insurer wants to develop an ECM strategy, early in the process they need to consider what they want to cultivate from the vast information stored in the content. From there they can train cognitive tools to gather appropriate information and make it accessible to underwriters and claims adjusters handling similar cases. This type of ­­­information helps identify patterns and trends for risk assessment, fraud detection, etc. This would start them down the path to unlock insightful information from their content that may have before been inaccessible.

Do you have any recommendations on where people can go to find more information about starting an ECM initiative?

Our ECM blog (subscribe below) does a really good job diving into both the technical and business value sides of ECM. I WANT TO STAY UP TO DATE ON INDUSTRY TRENDS

Okay, great. Well, thanks for sharing your knowledge Derick. After talking today I change my adjective from “intriguing” to “pretty darn fascinating.”

Still can’t give me “riveting?”

Close, but not quite. I think after another interview I’d be there.

Haha, sounds good to me!

 

 

Taylor Trapani

Taylor Trapani

Marketing Associate

About the Author: What I love about working in the Marketing Department at Pyramid Solutions is that no two days are the same. I get to write for a range of industries and constantly learn about our offerings which is so cool. During the weekends, I like to visit friends and family.

This post was originally published on June 27, 2016. It was updated on May 24, 2018.