An undisputed fact is that in the period from March, 2020 to present, business processes in almost every industry changed significantly. Whenever a business process changes, so do the associated risks.
For all of these changes in risks and processes, the insurance industry is sitting on a gold mine of knowledge but doing virtually nothing with it. Meanwhile, data giants Google and Amazon enter the business of insurance1 with confidence and swagger.
What knowledge does the industry have that it isn’t using? Every day hundreds of thousands of conversations happen across the risk and insurance industry. These conversations, from the US’s 1.6 million people in insurance2 and others across the world, represent knowledge.
This knowledge is facts, circumstances and decisions about the risk, and the related underwriting, pricing and claims adjudication related to the risk. It is critical knowledge about how things are changing, who is changing (or not changing) and what changes are working and which are failing.
It is an almost infinite wealth of knowledge.
While this knowledge is captured in such places as notes, narratives and diaries and stored in systems and records, the unfortunate reality is that sentence data is not readily consumable by insurance entities. It is captured but it isn’t consumable.
Insurance company systems use structured data to produce reports, populate predictive models and perform analyses. Unstructured data in its original form, including sentence, image, video and voice data, does not have this capability.
Of all unstructured data, sentence data has been around the longest, is arguably the most valuable and the most difficult to harvest.
To be clear, we’re not talking about identifying the sentiment or establishing relationships of themes and clusters of words. While those tasks are clearly valuable and useful, they lack both the granularity and context required to distinguish one risk from another. Or, likewise one claim’s activity from another.
Knowing that a lumbar discectomy failed isn’t nearly as valuable as knowing that the surgery was completed with complications, the claimant did not complete the required physical therapy, may have diabetes and is starting to go through a divorce.
Granularity matters. Context makes the difference.
The changes in business processes emanating from the pandemic highlighted a fact that most every seasoned executive in the industry already knows: things are changing all of the time. The faster insurance companies learn to tap the wealth of knowledge in their sentence data, the faster they will identify the changes and understand the new universe of opportunities for operational improvement in underwriting and claims.
This will benefit both insurance companies and the customers they exist to serve.