Speaking at yesterday's ISO Tech session, "The Next 'Killer Technology' In Insurance," in Las Vegas, a panel of industry experts made the case for data analysis and distribution, integration, geographic information systems, next-generation visualization tools, sensing technology and artificial intelligence.
"Carriers are coming to recognizing that one of the true resources that the insurance industry has is its data," said Jamie Bisker, global insurance industry leader, institute for business value, IBM Business Consulting Services (Armonk, N.Y.). Bisker referred to the findings of an IBM study called "Insurance 20/20," which projects what the business/technology landscape will look like in 10 to 15 years. "Many companies, such as State Farm, Allstate and Jefferson Pilot, for example, recognize the value of data and are looking for better ways to engage the data and make their connections with customers more meaningful, for the customer and the insurance company to break down some of those walls of animosity that have been building up in the insurance industry for quite some time." he observed. Bisker also identified geographic information systems (GIS) as an under-appreciated technology that would likely see greater play in the near future.
Building on Bisker's identification of data as a key area of innovation, Donald Light, a Palo Alto-based analyst with Celent (Boston), identified as a new area of "killer technology" a new generation of data visualization tools. He described them as "more fun, more compelling and easier to use than prior data visualization tools," such as graphs, bar charts, score cards and other graphic representations of data findings. "I'm going to make the bold prediction that these tools can even be understood by senior managers," Light quipped.
The new tools include link analysis representations, hot/cold density maps and maps with rich, deep and real-time data layers, according to Light. "These are applications that can take the huge amount of data that insurance companies have -- and which they are sorely challenged to make sense of -- and give executives tools that can make it faster, more fun and more easy to go into the data and discover patterns that are important across every insurance process." Examples where such tools could help, according to Light, were distribution through multiple channels, micro-segment pricing, underwriting guidelines and processes, claims and catastrophe management.
Examples of the uses of link analysis tools are the graphic representation of links between otherwise unrelated parties for fraud detection. Hot/cold density maps show concentration of certain kinds of data through more or less saturated blobs of color, especially blue for areas that are "cold" with respect to the data element in question and red for areas that are "hot" or show especially high density.
Chuck Johnston, group director, insurance, Siebel Systems (San Mateo, Calif.), affirmed the importance of data while submitting that, "integration is the killer app." Johnston referred to trends tying back to the concept of integration of both data and process. "I'm seeing a lot of interest now on how you tie larger business processes together." Insurers realize, he explained, that processes "have lots of pieces, and they're trying to bring them together using things such as Web services underneath, which are actually starting to get interesting.
Johnston noted a data dimension of integration involving the application of embedded analytics. In contrast to data warehousing projects in the past, he said, "people are saying, 'I've got good data within my operational processes, and if I start to integrate them end-to-end I no longer have to go through that large information-building process; what I'm focused on now is how do I use analytics in my process to further my process."
Kevin Kelly, Microsoft's managing director for the U.S. insurance industry, asserted that hardware and, specifically, sensing technologies would "enable us to do some really powerful risk management, identity and security management, and risk and catastrophe management for dealing with problems such as injury and illness.
Kelly cited better use of global positioning (GPS) technology and telemetry, for example, for use in locating and directing assets during a weather-related catastrophe. Another example would be the ability for insurance policies to automatically "mold" themselves with the acquisition of new personal property. "Your coverage could change based on your accumulation of assets," Kelly said. Technology such as RFID could provide a means of physically tracking the distribution of retail goods, not only within the possession of a policyholder, but on a broader basis that could provide insight into ends as remote as waste disposal related risk.
Kelly also argued for the increasing importance of biometric security technology, such as thumb-print and retina or iris scanners. "If we start to look at all of the underwriting possibilities, all of the risk management, catastrophe and injury management possibilities brought by these hardware devices, that integrated with the software platforms and data that [the other panelists] were just talking about, is the next frontier for us," he commented.
Pat Saporito, New York-based Information Builders' insurance industry practice manager, offered that, "I think the next wave is in artificial intelligence, but in a more truly operational way, as used in underwriting and claims adjusting, for example." Saporito argued that, among other uses, artificial intelligence could supplement the growing deficit of qualified underwriters in the insurance industry.
Anthony O'Donnell has covered technology in the insurance industry since 2000, when he joined the editorial staff of Insurance & Technology. As an editor and reporter for I&T and the InformationWeek Financial Services of TechWeb he has written on all areas of information ... View Full Bio