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Claims Process Automation with Artificial Intelligence

Kodak Alaris and CEB TowerGroup

ACE Conference 17 June 2015

CEB TowerGroup™ Insurance

4 © 2015 CEB. All Rights Reserved.

CEB TOWERGROUP INSURANCE

ROADMAP FOR THE PRESENTATION

Kodak Alaris Claims Imperatives

Business Drivers Data Challenge


A 100 COMBINED RATIO ISN’T WHAT IT ONCE WAS


100.8

92.7

95.7

101.2

99.5 101.0

106.5

102.4

96.7 97.4

9.6%

12.7%

10.9%

4.3%

7.4% 7.9%

4.7%

6.2%

9.8%

8.2%

0%

2%

4%

6%

8%

10%

12%

14%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014:Q185

90

95

100

105

110

Combined Ratio ROE*

Note: *2008 -2014 figures are return on average surplus and exclude mortgage and financial guaranty insurers. 2014:Q1 combined ratio including M&FG insurers is 97.3; 2013 = 96.1; 2012 =103.2, 2011 = 108.1, ROAS = 3.5%. Source: insurance Information Institute

Investment Impact on ROEs Combined Ratio/ROE


INSURERS STRUGGLE TO MAINTAIN PREMIUM INCREASES


Source: insurance Information Institute

Average Commercial Rate Change All Lines, 1st Quarter 2008-1st Quarter 2014

Note: CIAB data cited here are based on a survey. Rate changes earned by individual insurers can and do vary, potentially substantially.

-13.

5%

-12.

9%

-11.

0%

-6.4

%

-5.1

%

-4.9

%

-5.8

%

-5.6

%

-5.3

%

-6.4

%

-5.2

%

-5.4

% -2.9

% -0

.1%

0.9%

2.7%

4.4%

4.3%

3.9%

5.0%

5.2%

4.3%

3.4%

2.1%

1.5%

-15%

-10%

-5%

0%

5%

10%

1Q08

2Q08

3Q08

4Q08

1Q09

2Q09

3Q09

4Q09

1Q10

2Q10

3Q10

4Q10

1Q11

2Q11

3Q11

4Q11

1Q12

2Q12

3Q12

4Q12

1Q13

2Q13

3Q13

4Q13

1Q14


COST PRESSURE AND EFFICIENCY DRIVES DECISIONS


Impact of Factors on IT Strategy and Implementation Decisions Somewhat High to High Impact Responses, 2014

Note: Top seven selections of ten total choices depicted above n=36 Source: CEB TowerGroup Insurance Agenda Poll

82%

61% 60% 55% 54%

47% 43%

0%

20%

40%

60%

80%

100%

Cost-PressureEfficiency

NewRegulations

CustomerDemand

Agent/DistrbutorDemand

ProductChanges

TechnologyObsolescene

Availability ofInnovative

Technology


CUSTOMER LOYALTY RIDES ON LOW-EFFORT EXPERIENCE


Impact of Customer Service on Customer Loyalty Customer loyalty as defined by three customer behaviors: 1) repurchase, 2) buying more, and 3) word of mouth

Disloyalty of Customers Reporting High Versus Low Effort Tested on More Than 100 Variables

Tota

l Pot

entia

l Im

pact

1.00x

(3.97x)

More Loyal

Neutral

More Disloyal

9%

96%

0%

50%

100%

Low-EffortExperience

High-EffortExperience

Source: Federal Deposit Insurance Corporation, 2014; CEB analysis. Source: Federal Deposit Insurance Corporation, 2014; CEB analysis. n = 54,166. n = 54,166.


CUSTOMERS DEMAND MULTIPLE CHANNELS


Varying Channel Preference Across the Customer Journey Percentage of North American Insurance Customers by Channel Preference for Specific Activity

n = 1,441. Source: CEB 2013 Customer Experience Survey.

23% 35%

23% 27%

37% 20% 38% 16%

22% 30% 25%

46%

9% 3% 3% 2% 2% 3% 2% 2%

0%

50%

100%

Learn About a Product orService

Purchase Use or Access Receive Customer Support

In-person Online Phone Mail Mobile

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Kodak Alaris Claims Imperatives Business Drivers Data Challenge


DATA INITIATIVES ARE NOT YET USEFUL


The Information I Need To Do My Job is Available to Me Percentage of Employees

33% Yes

67% No

Information from Corporate Sources is in a Usable Format Percentage of Employees

54% No

46% Yes

Source: CEB 2012 Insight IQ Diagnostic. n = 8,335 employees.

Source: CEB 2012 Insight IQ Diagnostic. n = 8,335 employees.


MANAGING UNSTRUCTURED DATA


Source: CEB 2013-14 Adoption & Investment Survey.

Importance and Confidence in Data-Related Activities Percentage of Insurance Executives Ranking Somewhat Important, Important, Very Important and High or Complete Confidence

65% 60% 55% 51%

18% 21% 16% 15%

0%

25%

50%

75%

Data Integration Data Analysis Data Dissemination Data Visualization

Importance Confidence

n = 257.

n = 257. Source: CEB 2013-14 Adoption & Investment Survey.

Perceived Difficulty of Managing Various Data Types Percentage of Insurance Technology Executives Indicating “Somewhat” to “Very” Difficult to Manage

28% 28% 24%

20% 19%

0%

15%

30%

Customer Data AcrossLines of Business

External Data Business PerformanceData

Customer Data WithinLines of Business

Product Data


CUSTOMER-RELATED DATA IS FOUNDATIONAL


Most Critical Areas in the Next Six to Twelve Months Percentage of Respondents, 2014

41%

33%

31%

24%

19%

19%

13%

0% 10% 20% 30% 40% 50%

Integrating customer communications across channels andprocesses

Organizing data for actionable business analytics anddecision-making

Modernizing core insurance systems throughenhancements or new platform purchases

Applying technology to improve portals for customers andthird-party distributors

Preparing systems for upcoming regulatory requirements

Optimizing the value of customer data across channels

Developing or enhancing mobile tools for customers

Source: CEB TowerGroup Insurance Agenda Poll. n = 36. Note: Top eight selections of twelve total choices depicted above.






THE MAJORITY OF MILLENNIALS WILL SWITCH JOBS


Number of Employers Millennials Expect to Have During Lifetime United States, 2011

4%

54%

16%

9%

3%

14%

0%

20%

40%

60%

1 2-5 6-9 10+ Work for self Don't Know

Source: PWC <http://www.pwc.com/gx/en/managing-tomorrows-people/future-of-work/assets/reshaping-the-workplace.pdf>, 2011.


INSURERS ARE AWASH IN DATA


Source: CEB analysis.

Structured and Unstructured Content Sources for Insurance Data Types, Illustrative

Adjuster Notes

Underwriter Notes

Regulatory Requirements

Photos

Video

Email Chat Messages

Social Media

Inspection Reports

Medical Reports

Underwriting and

Claims Content Types


CUSTOMERS PREFER THE PHONE TO FILE CLAIMS


Ways Through Which Customers Prefer to Complete Various Financial Activities Percentage of All Insurance Customers, United States

14% 25%

32% 40%

28% 34%

76% 62%

30% 29%

17%

27%

10% 12%

38% 31%

55% 39%

0%

50%

100%

Make a Payment View or UpdateYour Policy

Add AdditionalServices

Close a Policy orAccount

File a Claim Change YourCoverage Plan

In-person Online Mobile Over the Phone

n = 117 Source: CEB Customer Experience Survey, 2013


ADOPTING A CUSTOMER LIFECYCLE VIEW OF THE CONTACT CENTER


Source: CEB analysis.

New View of Insurance Contact Centers Customer Life Cycle Contact Center, 2013

Claims and Underwriters CSRs Technology

Game-Changing Technology in Insurance

Analytics

Data Management Multichannel Integration

Self-Service Social Media SaaS/Cloud

Customer

Contact Center

Distributor Mobile Direct Mail

Email Online Portal

Social Media

Fax





50% Fa il to a nswer

80% 15x

80% Unstructured


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15x

F

15x More likely to lea ve

80% Unstructured


F

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15x More likely to lea ve

80% Unstructured


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