Future of motor insurance Let s Talk Innovation Swiss Re Nordics Motor Roundtable, August 2018, Sebastian Risse
Speed of Claim Payment Value Added Services Accessibility Price 2
New Technology and Approaches Help to Make the Claims Process More Efficient and Effective Claim Submission Claim Processing Adjudication & Decision Payment Handling Reinsurance Customer Portals Mobile Apps Online Forms Social Media Digitization Automation Document Classification Robotics Image Recognition Chatbot Big data Artificial Intelligence Segmentation Drones Blockchain Offsetting Partner Solutions Acord Messaging Risk Based Work Distribution (Claim) Portfolio Management Approach to Implement new Technology & Methodology Data Analysis, Solution Definition, Project Management, Change Management 3
Please vote for the trend that interests you most and you want to discuss further now: Enter a single word only Claim Submission Claim Processing Adjudication & Decision Payment Handling Reinsurance Customer Portals Mobile Apps Forms Social Media Digitization Automation Classification Robotics Imaging Chatbot Bigdata AI Segmentation Drones Blockchain Offsetting Partner Solutions Acord WorkDistribution Portfolio Approach to Implement new Technology & Methodology Analysis, Solution, Project, Change 4
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When to use Robots 6
Should I consider building a robot? Is the process entirely based on rules? No Robots currently can only handle Rules Based Processes Yes Is the data available electronically? No Consider digitization first (e.g. scanning) Yes Is the data structured / in a consistent pattern? No Yes Is Manual preprocessing feasible? (e.g. Align into Template) Robots: Let them work while you think Yes How much time do you spend a year on this task? < 0.5 FTE Is the process a control which has had failures? > 0.5 FTE Process may be a good candidate for Robotic Process Automation Yes Why use a Robot? Robots free up employees to perform higher value activities Robots are able to automate manual, repetitive, rulesbased activities Robots do not make mistakes, increasing accuracy and data quality Robots can run 24-7 and in parallel, supporting peak workload periods 7
Document Classification Example: Flexible Document Classifier 8
The Flexible Document Classifier identifies Claims Documents that require a Manual Review Subrogation Court Case Fraud Client sends claim documents FDC scans documents Auto Processing Manual Review 9
Automation Example: Claims to Contract 10
C2C Automatically matches Claims to Contracts by Identifying Key Information in Unstructured Documents to SwissRe s Structured Databases Submission Induction Search & Indexation Delivery to Analysis Input Automated Claim Search TMA: IF prediction is greater than X%, THEN select Claim ID, details are Auto Populated & Auto=Complete Output Automated Contract Search @Swissre.com @Swissre.com @Swissre.com @Swissre.com @Swissre.com @Swissre.com 62 Active Induction email addresses for Crew 20,000+ monthly submissions 14,000 new claims per quarter Acord: Auto Triage Non-Acord: Predictive Triage tools: TMA finds claim C2C finds contract & Cedent IF no Claim is found, check via C2C for Contract ID: IF prediction is greater than X%, THEN select Business ID, details are Auto Populated & Auto-Complete Automated Cedent Search IF no Claim or Contract is found, check via C2C for Cedent: IF prediction is greater than X%, THEN select Cedent ID, & Auto-Complete Process Characterization Name Documents & Infer what kind of Document Type it is: I.E. Payment or First Advice and Add Process Driver High Low Flow Analysis In-Box Analysis In-Box Analysis In-Box Greatly simplify the number of active Routing Rules Significantly reduce the number of active Doc Classes Still routes to Operations Operations verifies triage accuracy and amends as needed (Teaching the machine) 11
Block Chain 12
From Contract Uncertainty Reconciliations Multiple Sign-offs and Delays The Vision Credit Risk Financial Reporting Risk Cash Flow Inefficiencies To Reinsurer Retrocessionnaire Bank Shared mutual ledger Consensus Process Smart Contracts Smart Contracts Improved Data Quality and Exchange Fast and Auditable Sign-offs Auto-execution of Contract Conditions Direct Settlement Insurer Regulator Faster and Transparent Cash Settlement Policyholder Swiss Re Nordics Motor Roundtable 30 August 2018 13 Sebastian Risse
Swiss Re expects a range of benefits in respect to Block Chain Working Capital Improvement Operational Efficiency and Risk Reduction Quality and Integrity of Data Foreign Exchange Management Faster and more efficient premium and claims settlement and optimised liquidity management Reduction of contract uncertainty, reconciliations and process inefficiencies Normalised and highquality data in a shared source with central control over integrity and easier auditing Accelerated FX transactions and consistent valuation Positive Impacts: Combined Ratio conservative estimate of -0.5% Improved liquidity Risk Reduction More info: https://www.linkedin.com/pulse/b3i-turning-blockchain-use-case-business-paul-meeusen?published=u 14
Blockchain Insurance Industry Initiative - Smarter together across the industry Key Facts Vision: Jointly explore the potential of Blockchain technology in industry-wide use cases to better serve end-clients Foundation: Five founding members with equal rights Initiative launch date: October 2016, foundation meeting took place at Swiss Re Focus: A first pilot project for retrocession of large insurance contracts between the participating companies is initiated, based on Swiss Re developed prototype Membership requests: B3i is open for other insurers and reinsurers to join. Several large firms have announced interest. Press release: 15 http://www.swissre.com/reinsurance/insurers_and_reinsurers_launch_blockchain_initiative.html
The B3i Pedigree Shared Ledger Technology and ACORD Communication Standard codified exchange of business data (between different systems) mutually verifiable end-points (origin and destination) data transport security & integrity Structured Business Process Template clear sub-process triggers & terminations Agreed behaviours (ecot, ebot) B3i Single Source Data Contract Structure Attribute population Partition & Ownership Status Tracking Explicit/Executable Rules Agreed calculation logic Deterministic Outcome Data Representation Model agreed definitions & attribute relationships Single Process Orchestrated Steerable Auditable Secure Leverage Existing Knowledge Base to Advance Market 16
Acord Messaging 17
ACORD Standards ACORD is a Non Profit organisation developing transactional standards in the Insurance and Reinsurance sectors. Also operates in the L&H and P&C forms arena Standards are updated every 12-18 months Swiss Re is an ACORD member and is heavily involved in developing and maintaining messaging standards in the Reinsurance and Large Commercial (GRLC) sector The Rüschlikon Group is a market initiative of large brokers & carriers* to implement a common subset of the ACORD GRLC standards called: ebot: Implementation guidelines for accounting and settlement messages ecot: Implementation guidelines for claim messages Other industry groups & markets are implementing ACORD messaging, usually aligned to Rüschlikon Group's ebot / ecot implementations (e.g London Market s Central Services Refresh Program, run by XIS) *Participants: Aon, Guy Carp, Willis, Swiss Re, SCOR, Munich Re, Hanover Re, XL group, Axis, Partner Re, etc.
ACORD Based Claim Handling: Building a Claim Movement with messages Group Refs link messages across multiple currencies CM Sender creates one Claim Movement message per layer: Movement Type (various indicators) : initial_advice, subsequent_advice, closing_advice, replacement, reopen, reopen_and_close Type of Transaction (various indicators) : Status Update, Reserve Update and/or Payment, Contract and Xref to CM Claim Details: references, participations, Date of Loss / Description / Loss Location, etc. 100% layer figures (Recommended: FGU figures) TA If settlement required, Sender also creates a TechAccount message: Transaction Type: claim_transaction Xref to TA Xref to Claim and associated CM message Net Receiver Shares figures TA RIP In case of RIP, a further TA message for the premium amount: Transaction Type: reinstatement Xref to Settlement TA Currency USD Currency CHF Currency EUR Group Ref CMs (across currencies) Group Ref TAs (across currencies)
Portfolio Management 20
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Big Data Example: Claims Development Tracker 23
How Do You Handle Your Claims? 24
Historical Claim Behaviour will Identify New Claim Outliers Normalised Value [$/$Tot.Inc] Y 1.0 0.8 Deviation from expected behaviour Q3 (75%) Q2 (median) Q1 (25%) Total Incurred Claim Portfolio Q2 (median) Q1 / Q3 limit Claim portfolio datapoints Claim IC123 development Claim IC123 outlier 0.6 0.4 0.2 0 (DoL) 1 2 3 4 N Adjusted Age in years [AsOfDate DoL] 25
The Claim Handler 120 Average prediction error - % over lifespan 100 80 60 Predict the behaviour of a single based on the claim handler markets, clients and claims portfolios knowledge 40 20 0 0 10 20 30 40 50 60 70 80 90 10 Claim Handler
The Claim Handler and Claims Development Tracker 120 Average prediction error - % over lifespan 100 80 Predict the behaviour based on historical claim behaviour Better claim adjudication (fraud detection, portfolio steering, etc.) Better reserve management ( Single Claim Reserving ) 60 40 20 0 0 10 20 30 40 50 60 70 80 90 10 Claim Handler CDT
Approach to Implement new Technology & Methodology 28
Overview SwissRe s World Class Processes (WCP) improves internal business processes with the goal to provide efficient and effective procedures which address the clients needs. The following slides show how WCP improved the claims handling and technical accounting processes through: 1. Identification of improvement opportunities through as-is monitoring 2. Root Cause Analysis of as-is Processes 3. Definition of Solutions in Collaboration with the Employees 4. Implementation of new Processes using Change Management Techniques 29
1. Identification of improvement opportunities through as-is monitoring: Which KPI s don t match the strategic direction? Business Management Cockpit World Class Processes: Claims and Technical Accounting Continuous Process Improvement through Bottom-Up Initiatives (Employee Driven) Measure Analyses Productivity Throughput Data Quality Customer Satisfaction Snapshots Trends Comparisons Best Practice/ Benchmarking Regional Process Variations generate Inconsistent Results Digitalization und Automation during Triage and Analysis Low Data Quality, Productivity and Turnaround Time don t Meet Client Expectations 30
2. Root Cause Analysis of as-is Processes : What has to Change? Sample Analysis Tools World Class Processes: Claims and Technical Accounting Process Mapping All Bookings are processes equally, no Segmentation Root Cause Analysis Employees take No Ownership for data quality, etc. Front loaded Analysis require High Manual Efforts Data Stratification Low Risk Appetite with lead to non-value added reviews 31
3. Definition of Solutions in Collaboration with the Employees: What does our Solution look like? World Class Processes Technical Accounting From One-Size-Fits-All to Differentiated Processing to Focus on Valuable Transactions Claims Handling From High/Low/Flow challenges to Getting to 60% Flow Business Focus on the big picture Less Queue Mgmt Focus on Important Cases Find the needle in the haystack Keep a Portfolio Oversight Steer the business using Smart Tools Segmentation Client Impact Focus Less controlling of clients that we trust Ignore small mistakes Put the efforts into cases that need our attention Minimize Manual Claim Approvals Letting go of low risk claims: Give claim approval to set the claim to flow until an exception: Define thresholds & limits Approval Expiration Date Become a detective From preventive to detective checks: most transactions will be good, so we will analyze them holistically after processing Technical Approval Start Claims notice Smart Review Booking Escalation Approval needed? Decision Making End 32
4. Implementation of new Processes using Change Management Techniques: How can we onboard our employees? The 5 Steps of Change Management World Class Processes: Claims and Technical Accounting Business Experts are included during analysis and solution definition Project Steering at all organizational levels Dry Runs before going live: Test new processes on existing portfolios Multi-tiered KPI Definitions 33
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