Proactive risk management has become the linchpin in revolutionising how insurers approach customer experience, underwriting, pricing, and the concept of ‘prevention being better than cure’ in today’s increasingly digitised world. The impact can be seen on the growth of the global insurtech market which was valued at $5.45 billion in 2022 and is projected to grow by more than 52% annually through 2030. This provides insurers with the opportunity to leverage advanced technologies as the means to enhance customer outcomes while mitigating risk.

Given the nature of the industry, insurers have always had to manage a significant amount of data. But thanks to the rapid evolution of technology, more refined tools such as artificial intelligence (AI), machine learning, and sophisticated algorithms are now available. These can be used to manage and interpret data more efficiently. An amalgamation of data and automation provides insurers with a cost-effective, user-friendly solution to proactively manage risk.

Rethinking data

Insurers can now harness health and wellness data, available in abundance from wearable devices and other platforms. However, the challenge lies in seamlessly integrating this new influx of data within existing processes. This is where solutions like the Alula Technologies HealthCloud platform come into play. HealthCloud enables the ingestion of data from a myriad of input channels such as wearables, remote diagnostics, pathology labs, rPPG (face scanning technology using PC and smartphone cameras), and even insurers’ own databases to provide a comprehensive health profile of an individual policyholder.

It is important to remember that data, in itself, is a dormant asset until it is integrated seamlessly into business processes. It is the application of this data through AI and proprietary algorithms that unlocks its potential. Alula Technologies’ HealthCloud generates Health Scores from more than 60 data points to ensure insurers can better understand their customers and anticipate and identify potential risks across their portfolios. By deploying proactive strategies, such as personalised health nudges, home testing kits, and regular check-ins, insurers can manage risk, enabling them to promote healthier lifestyles and deliver more accurate pricing models that better reflect individual customer profiles.

Success built on partnership

However, implementing this proactive approach is not without its challenges. The scars from previously expensive and unsuccessful tech projects, budgetary constraints, and internal resistance may hinder the harnessing of this data by insurers. At Alula Technologies, we believe in partnering with our clients, addressing these issues head-on, and adopting a scalable, test-and-learn approach.

Engagement and education are integral for risk prevention and mitigation. Here, the role of technology cannot be overstated. Using personalised messaging, relevant content, and timely reminders can help foster a more proactive approach in the relationship between insurers and policyholders. The next shift in engagement lies in rewarding positive changes, with dynamic pricing being the ultimate goal.

As we look to the future, we believe the true challenge lies in effectively using these tools to benefit both customers and insurers. The notion of active book management, facilitated by data and automation, paves the way for providing unparalleled health and financial value to customers. Insurers, in return, benefit from better risk management and customer relationships.

Overcoming pain points

To prepare for this shift, insurers must start their transformation now. Identifying customer pain points and finding solutions, using the available tools, and adopting a continual testing-and-learning approach, should be the initial steps. Since technological advancement is continuous, it is crucial for insurers to partner with a company that allows for growth at their own pace.

The future of proactive risk management in the insurance sector lies in harnessing insurtech effectively. At Alula Technologies, we are committed to making this future a reality, transforming the insurance industry one data point at a time.

About Alula

The Alula Technologies group provides business critical solutions to Life and Health insurance and Pensions companies. Our solutions modernise policy administration, digitalise policyholder and channel engagement, and intelligently automate key insurance business processes. We also integrate first and third-party data, including health and wellness data, to drive more efficient operations, improved policyholder experiences, and a better understanding and management of risk.

Auto insurance is leading the charge with the adoption of dynamic pricing, which entails developing policies that are more cost-effective for low-risk customers and using a different premium model for high-risk policyholders. There is significant potential for life and health insurers to capitalise on this momentum and embrace this model within subsets of their product offerings. These opportunities are born from the ability to tailor premiums based on real-time data and analytics.

Insurers planning to implement dynamic pricing will make use of advanced technologies and sophisticated algorithms through artificial intelligence and machine learning. This will provide an additional layer of insights on top of the massive amounts of data insurers are collecting from various channels. The supporting technology already exists, with the likes of telematics devices, wearables, social media, historical claims records, and health records, which are all being used to provide a comprehensive view of an individual customer.

Understanding this data empowers insurers to gain insights into individual risk profiles and provides them with the means to adjust premiums accordingly. As part of this, we are now able to adapt pricing in real-time, allowing for personalised and dynamic coverage. This serves to further strengthen the customer experience and promote more frequent interaction between the insurer and the policyholder, building the trust relationship between individual and institution. In turn, this will reduce churn in a highly competitive marketplace.

The importance of data and analytics

Data and analytics are crucial in an insurer’s approach to dynamic pricing. Using advanced analytical techniques, insurers can assess risk with greater precision. This will empower them to better differentiate between high-risk and low-risk policyholders and, per implication, implement more accurate pricing geared to each target market. Furthermore, data-driven insights provide insurers with a view of emerging trends to guide them in developing products that reflect market needs while enhancing their underwriting practices.

Dynamic pricing also has the benefit of positively impacting customer behaviour, and the relationships insurers have with their customers. With personalised pricing, customers will be incentivised to adopt safer behaviours, such as defensive driving or proactive health management. This shift can lead to a mutually beneficial relationship that sees insurers reward customers for risk mitigation and prevention. However, some customers may feel uneasy about the perceived intrusion of their privacy or the potential for sudden premium increases. It is, therefore, up to insurers to communicate the benefits of this data usage and address any concerns customers may have to maintain trust.

The challenges of transitioning

Transitioning from traditional pricing models to dynamic pricing poses several challenges for insurers. Accurate data collection, redundant storage, and effective analysis must be maintained. Leveraging reliable data from multiple channels is essential if an insurer is to truly benefit from dynamic pricing. Additionally, insurers must invest in robust infrastructure, analytics capabilities, and specialised skills to effectively leverage the power of data. Moreover, regulatory considerations, including compliance with fair pricing practices and the use of personal data, need to be addressed to ensure a smooth transition.

Insurers must also be cognisant of the ethical implications tied to dynamic pricing, particularly fairness and discrimination. To address these concerns, insurers must remain committed to maintaining transparency in their pricing methodologies. As such, they must provide clear explanations for premium adjustments based on risk factors and encourage customer education on the benefits of dynamic pricing.

Dynamic pricing provides insurers with the means to fundamentally revolutionise their business models, once proven in subsets of product suites. Integrating data analysis at scale using advanced technologies will enable insurers to better align pricing with risk profiles and customer behaviour. Additionally, customers will be empowered to make proactive choices based on their risk profiles.

There are technical complexities, alleviating customer concerns and addressing the potential ethical implications to ensure a fair and sustainable pricing ecosystem that must all be considered. However, by embracing these and leveraging the opportunities offered by dynamic pricing, insurers can forge stronger relationships with customers, enhance risk management practices, and drive greater customer satisfaction and loyalty.

About Alula

The Alula Technologies group provides business critical solutions to Life and Health insurance and Pensions companies. Our solutions modernise policy administration, digitalise policyholder and channel engagement, and intelligently automate key insurance business processes. We also integrate first and third-party data, including health and wellness data, to drive more efficient operations, improved policyholder experiences, and a better understanding and management of risk.

The evolution of consumer expectations in the insurance industry is reshaping the traditional insurer-customer dynamic. Customers are no longer satisfied with a one-size-fits-all approach; they are looking for a more personalised, meaningful, and continuous engagement with their insurance providers. Insurers, therefore, need to leverage a multitude of touchpoints to foster these deeper connections, driving customer satisfaction and retention while opening new avenues for business growth.

Today’s consumers, backed by the digital revolution, expect on-demand services and real-time interactions. They are increasingly looking for an experience that is tailored to their unique needs and preferences. Recognising this, insurers must shift from transactional interactions to consistent, personalised touchpoints that not only enhance the customer experience but also build long-lasting relationships.

Typically, customers engage with an insurer maybe once a year – either to discuss their premium increases or to submit a claim. And if no claim is submitted, how can a person really tell whether their insurer is good or not beyond looking at the price point argument. A global survey found that 57% of UK customers are considering changing their insurer in the next 12 months, significantly higher than the global average of 40%. With insurers, therefore, under increasing pressure to find more innovative ways of differentiating themselves, the focus has turned to personalisation.

The power of multiple touchpoints

Embracing multiple touchpoints is the key to achieving this. A well-integrated multi-touchpoint strategy helps insurers capture and understand a 360-degree view of their customers. From Web sites, mobile apps, and social media platforms to wearables and IoT devices, every touchpoint holds the potential to gather insights into consumer behaviour, preferences, and needs. By weaving these insights into their strategies, insurers can deliver tailored offerings, proactive risk management, and superior customer service, aligning closely with the evolving expectations of consumers.

Data lies at the heart of this personalisation. With each interaction, insurers have an opportunity to collect valuable data points that paint a vivid picture of the customer’s journey. Advanced analytics and machine learning can leverage this data to create personalised solutions, predict future needs, and offer real-time assistance.

Consider a policyholder with a wearable device. Regular activity tracking not only helps the insurer provide customised wellness programmes and advice but also dynamically adjust premiums, reward healthy behaviours, and provide proactive alerts. The use of such data to offer personalised experiences transforms the insurer from a mere service provider to a trusted health partner.

Managing the challenges

While the move towards more touchpoints presents considerable opportunities, it also brings challenges, notably around data privacy and security. Insurers must ensure robust data protection measures are in place and operate with transparency to maintain customer trust. At Alula Technologies, we champion secure data handling, transparent practices, and informed consent, ensuring that our technology solutions remain customer-centric, secure, and compliant.

The future of insurance lies in ongoing engagement, rich in personalisation and driven by a deep understanding of customer needs. It is about moving beyond transactions to create a consistent dialogue that offers value at every step of the customer’s journey. By using technology to increase touchpoints and personalise experiences, insurers can build stronger relationships, enhance customer loyalty, and pave the way for sustainable business growth.

As insurers embark on this transformative journey, Alula remains committed to facilitating deeper connections between insurers and their customers through advanced, secure, and intuitive technological solutions. We envision a future where insurance is not just a transaction but an ongoing, personalised partnership, delivering value at every interaction and touchpoint.

About Alula

The Alula Technologies group provides business critical solutions to Life and Health insurance and Pensions companies. Our solutions modernise policy administration, digitalise policyholder and channel engagement, and intelligently automate key insurance business processes. We also integrate first and third-party data, including health and wellness data, to drive more efficient operations, improved policyholder experiences, and a better understanding and management of risk.

For insurance, digital transformation has become a business imperative. As part of this, adopting advanced technologies such as artificial intelligence (AI) and machine learning (ML) to automate manually intensive functions can reshape the insurance landscape, especially when it comes to its core functions, such as underwriting, claims processing, and customer service.

Using AI to drive automation can significantly streamline business operations by enabling a faster decision-making process and reducing manual workloads. Furthermore, automation can improve the efficiency and accuracy of underwriting by assessing risk better using external datasets. With an automated environment in place, insurers can personalise the customer experience through chatbots, virtual assistants, and personalised pricing. Intelligent systems not only analyse and extract data from claim documents, but they also keep the customer informed throughout the process, leading to quicker claim decisions and higher customer satisfaction.

Regulatory considerations

Nevertheless, it remains crucial to ensure these technologies operate within stringent data privacy, compliance, and ethical boundaries. Using AI to deliver automation presents significant challenges, including quality of and access to data, the need for specialised skills, and operational change management. Many AI algorithms rely on large volumes of high-quality data to train models or make accurate risk predictions, and recruiting and retaining the right people who can work with data science or AI toolsets is a significant task.

However, the opportunities far outweigh the challenges. AI and automation offer insurers a competitive edge, allowing for better risk management, quicker customer onboarding, custom-tailored insurance products reflecting actual risk, and, overall, an improved customer experience. Insurers must therefore embrace the need for change and implement plans that address the potential impact on existing business processes.

Part of this entails continuing to drive the innovation agenda at boardroom level. This includes not only supporting experimental projects but also fostering an environment that encourages new ideas and transparent discussions about new initiatives. It is equally important to invest in people with new technology skillsets, create strategic partnerships with technology and data providers, and focus on customer-centric solutions.

Workforce transformation

As insurers integrate AI and automation into their systems, they must acknowledge the impact on the workforce. While automation will eliminate certain tasks, new roles and responsibilities will emerge. Transparent communication, continuous reskilling and upskilling activities, re-defining job roles to include higher-value activities and improved employee well-being support are all part of a comprehensive strategy for managing this transition.

Amid increasing concerns about data privacy and security, leveraging AI and automation responsibly becomes a priority. Insurers must embrace stringent data governance and design solutions with data security and privacy at their core. This includes ensuring informed consent from customers, maintaining transparency in AI systems and their decision-making processes, and employing robust data security measures. AI techniques that preserve privacy should be used, allowing for insights to be derived without exposing sensitive information.

Industry-wide approach

It is also important to collaborate with industry bodies and regulators to shape best practices around the use of AI and the resultant automation. Doing so not only safeguards customers but also promotes a sustainable approach to digital transformation.

To this end, insurers are focusing efforts on integrating AI into their systems and processes to deliver more intelligent, automated solutions that can rapidly scale to their business requirements. Improvements in efficiencies while improving the customer experience have become crucial strategic enablers, with AI providing insurers with the tools to do so in enhanced ways.

As insurers continue on this transformative journey, Alula stands committed to leveraging AI to deliver automation to deliver value while adhering to our principles of responsibility, privacy, and customer-centricity. These technologies, when used ethically and responsibly, have the potential to fundamentally enhance the insurance industry, leading us towards a future of better risk management, efficient processes, and personalised experiences.

About Alula Technologies

Alula Technologies provides business-critical solutions to Life and Health insurance and Pensions companies. Our solutions modernise policy administration, digitalise policyholder and channel engagement, and intelligently automate key insurance business processes. We also integrate first and third-party data, including health and wellness data, to drive more efficient operations, improved policyholder experiences, and a better understanding and management of risk.

The rapidly expanding adoption of wearable technology and the Internet of Things (IoT) marks a turning point for the life and health insurance industry. Consumers today understand the value of their data with the potential for wearables further providing impetus to unlock a richer insurance experience. But what does this transformation look like, and how can insurers navigate potential obstacles while preserving consumer privacy?

This is also reflected in the adoption rate of wearable devices. At the end of last year, more than 1.1 billion people globally used their wearables to get connected, up from 722 million in 2019. While initially driven by the smartwatch market, wearables have expanded to include wristbands, hearables, and other fitness devices. According to Munich Re, wearables present an appealing value proposition for people who want their connected devices to deliver a more personalised experience. At a fundamental level, wearables provide a means for life and health insurers to continually engage with their policyholders, moving from infrequent touchpoints to daily interactions. In doing so, the potential for stronger relationships between insurers, their partners, and policyholders can unlock new business growth opportunities.

The power of wearables

Wearable technologies enable insurers to access dynamic, real-time health data about policyholders. This wealth of data, reaching beyond historic health records, offers insurers an intricate view of a person’s lifestyle, facilitating more accurate risk assessment and personalised product offerings. The insights derived from wearables, tracking everything from activity levels to resting heart rate and sleep patterns, present insurers with the means to refine pricing and risk classes, making them more competitive.

Moreover, this continuous stream of data offers insurers the opportunity to dynamically adjust pricing and engage more proactively, based on an individual’s ongoing health behaviours. This is a transformative shift from traditional underwriting, which largely relies on static health information obtained at the point of policy issuance. But beyond underwriting, using wearables can positively impact all aspects of the insurance sector.

For example, biometrics can ensure healthcare providers can deliver preventative intervention at lower costs and efficiencies than without a connected sensor being used. Research from behavioural psychology and economics show that wearable technology is an effective tool in changing individual attitudes, behaviour, and ownership of health problems to the net benefit of the subject’s health and a cost reduction from an insurer’s perspective.

Addressing the elephant in the room

Integrating wearable technology data into underwriting processes is not without challenges, particularly around privacy and the ethical use of personal data. Insurers must demonstrate a commitment to privacy by ensuring secure data handling, transparent practices, and obtaining informed consent from policyholders for data use.

Another challenge lies in the integration, maintenance, and support of this new technology. Rather than building costly and complex proprietary solutions, insurers can lean on partners like Alula Technologies who have developed secure and scalable solutions like the HealthCloud platform which provides a consolidated feed of data from various wearable device and health tracking platforms. HealthCloud’s embedded algorithms are able to handle vast amounts of data streams, provide real-time analysis and powerful insights in the form of health status and risk scoring.

Furthermore, insurers must navigate data validity concerns. Wearables vary in quality and accuracy, potentially impacting the reliability of the data. To address this, Alula not only rigorously tests all data streams for accuracy and validity, but also advocates for a comprehensive view of risk, supplementing wearable data with traditional health data, such as medical history from doctors, hospitals, pharmacies, and pathology labs, together with wellness and claims data.

The power of partnership

As wearable technology becomes more prevalent, collaborations between insurers and tech companies can drive innovation. Partnerships offer an avenue to blend expertise, resulting in products that are tailored to consumers’ needs while incorporating the benefits of real-time health data.

Furthermore, a collaborative approach with customers also needs to be considered. Educating customers about the benefits and risks of sharing wearable technology data is essential. It is crucial to communicate the advantages of sharing data, such as more personalised offerings and potentially lower premiums. But trust is the bedrock of this new insurance landscape. Insurers need to be transparent about data usage and the measures in place to ensure its protection.

Taking this further, insurers can leverage wearables to encourage healthy lifestyles amongst policyholders, offering rewards for healthy behaviours – a concept known as shared-value insurance. This not only helps insurers manage risk but also positions them as a supportive partner in the policyholder’s health journey.

Positive disruption

The incorporation of IoT and wearable technologies into the life and health insurance space represents a seismic shift from traditional underwriting practices. As we explore this new terrain, it is clear that these technologies offer significant opportunities for insurers to enhance risk assessment, tailor products, and engage customers in their health.

At Alula Technologies, we remain committed to leading the industry in leveraging wearable technologies for the benefit of insurers and policyholders alike. As we overcome the associated challenges, we envision a future where life and health insurance are not just transactions, but a dynamic partnership between insurer and policyholder, rooted in health and wellbeing.

About Alula

The Alula Technologies group provides business critical solutions to Life and Health insurance and Pensions companies. Our solutions modernise policy administration, digitalise policyholder and channel engagement, and intelligently automate key insurance business processes. We also integrate first and third-party data, including health and wellness data, to drive more efficient operations, improved policyholder experiences, and a better understanding and management of risk.

The insurance industry is well-known for its reliance on legacy systems and in-person processes. However, a shift is taking place that is being fuelled by digital distribution and self-service models as insurers look to become more forward-thinking when it comes to modernisation and digitalisation.

As more insurers move towards digital distribution, the customer landscape is changing. Today, it is all about immediacy and convenience rule. Customers want to purchase policies, file claims, and manage their accounts with a few taps on their smartphones. This shift to digital has required insurers to reevaluate their operational models and prioritise expanding on their digital capabilities while looking towards a more omni-channel customer experience where people engage using the platforms they are most comfortable with.

Those insurers who have already embraced digital distribution have been able to experience enhanced customer engagement, more cost-effective operations, and greater scalability to cloud-based environments. Of course, there are also considerations around data security, regulatory compliance, and system integrations to keep in mind.

Helping insurers meet this increasing client demand for self-service and convenience, artificial intelligence (AI) and machine learning (ML) are increasingly becoming essential. These advanced technologies enable insurers to provide personalised, interactive experiences. Not only can customers now troubleshoot problems and handle policy changes they can also process claims independently from engaging with an agent, any time of day.

Overcoming obstacles with Alula

One of the most significant challenges traditional insurers are facing in this dynamic market is to migrate offline processes to cloud-based environments. This is particularly relevant for processes such as obtaining physical signatures and medical underwriting.

But there are options available to insurers to overcome this. For instance, Alula Technologies provides insurers with the ability to automate underwriting of new policies, resulting in more efficient risk management and innovative product design. From a digital distribution perspective, this introduces improved efficiencies, lower costs, an enhanced customer experience, and personalised policies to name just a few benefits. Automating the underwriting process is a key step for modern insurers to become more customer-centric to deliver more innovative and customised solutions.

Furthermore, Alula Technologies has extended this into a claims automation solution that uses AI modelling to replicate the insurance expert’s decision-making, enabling claims to be processed in real-time, while providing the necessary risk oversight. Throughout this, insurers can have the peace of mind that their new processes are secure, compliant with regulatory standards, and user-friendly.

Enabling remote sales

Today, insurers must reimagine their product offerings to mimic the effectiveness of in-person, advice-based relationships. In part, this necessitates the simplification of insurance products to make them easily understandable and accessible to customers online.

Interactive tools such as chatbots and virtual advisors can be employed to guide customers through the product selection process. AI can be harnessed to personalise product recommendations based on individual customer profiles. A good example of this is the Alula Technologies Health Score which forms part of the HealthCloud platform for life and health insurance companies. The Health Score can be used to deliver a level of personalisation previously unimaginable. HealthCloud connects to an entire ecosystem of health and wellness data, solving data interoperability, and providing a unified view of a consumer’s individual health profile.

The Health Score is already used by insurance and healthcare providers who have directly integrated with the HealthCloud platform. It provides a dynamic evaluation of an individual’s health status. These scores are derived through proprietary algorithms considering an integrated analysis of insurer data, Electronic Health Records, medication usage, pathology results, remote diagnostic devices, wearables, and facial scanning (rPPG), offering insurers a comprehensive view of a policyholder’s health profile. With the associated insights provided by the Health Score, an insurer can recommend specific solutions more tailored to an individual customer’s needs. This facilitates greater upselling and reduces churn thanks to more relevant offerings to an individual.

Insurers are investing heavily in equipping their sales teams with the necessary digital skills and tools for remote distribution. This includes training in digital communication tools, online sales techniques, and customer relationship management software.

The shift towards remote distribution has proven to be beneficial in several ways. It has resulted in a wider reach to enable insurers to connect with customers beyond geographical boundaries. This provides end users with the ability to take ownership of the buying process. For instance, using online tools to onboard themselves as opposed to being reliant on agents. Additionally, it has also resulted in improvements to productivity as sales representatives can manage more client interactions in a day. Using advanced tools, these agents are more digitally enabled and have more options available to them to deliver improved service to end users.

All about change

The shift towards an increasingly digitalised environment that includes digital distribution, self-service, intelligent claims processing, and underwriting is a transformative journey, not a destination. Yes, this can be complex and challenging for insurers. But it all comes down to being focused on embracing technology and digitalisation to more effectively navigate this continually evolving landscape.

For Alula Technologies, it is about providing innovative solutions that position insurers better as they look to overcome the challenges of the future. By being willing to embrace digitalisation, leveraging richer data analysis, and focusing on a service offering built around a richer customer experience, insurers can harness new opportunities to usher in a new chapter delivering enhanced customer engagement and business growth.

About Alula

The Alula Technologies Group provides business critical solutions to Life and Health insurance and Pensions companies. Our solutions modernise policy administration, digitalise policyholder and channel engagement, and intelligently automate key insurance business processes. We also integrate first and third-party data, including health and wellness data, to drive more efficient operations, improved policyholder experiences, and a better understanding and management of risk.

Managing claims is a core business process for any insurer. It is also one of the most time-consuming areas that requires customer verification, validation of claim details, and the management of the authorisation and payment release processes. Claims automation solutions can be an essential enabler to help streamline processes, reduce manual effort, and improve the speed, accuracy, and consistency of claims.

Typically, data used when making decisions on claim pay outs is collated manually. Not only is this very resource-intensive, but it is also prone to human error. Furthermore, external data sets are seldom used to verify the validity of internal data and claims which often result in incorrect or inaccurate decisions being made.

Another challenge when it comes to traditional approaches to claims is that different individuals within the business are involved at virtually every step of the process. This can result in inconsistent and potentially error-prone decisions as well as massive inefficiencies within the business.

Intelligent automation

Claims automation provides a more effective way of overcoming these obstacles. It can be defined as solutions that automate various aspects of the claims process, such as data capture, validation, and processing. By replacing manual processes with this more automated approach, insurers can reduce the number of human experts required for administrative-intensive tasks.

In line with this, Alula has introduced its Smart Claims solution. This claims automation solution uses artificial intelligence (AI) modelling to replicate the insurance expert’s decision-making, enabling claims to be processed in real-time, while providing the necessary risk oversight. This digital twinning is considered the next evolution in the claims automation process.

Next evolution

It replicates an insurer’s underwriting, claims, compliance, and legal teams’ expertise. It learns – and continues to learn – the decisions that they would make, freeing them up from the business-as-usual tasks, so that they can focus on applying their expertise on higher valued tasks within the business

These AI models are continually assessed. This ensures they are capable of making the best decisions possible, every single time. The smart claims solution injects real-time insight from multiple experts such as the underwriting, compliance officer, and legal department and applies that to every claim submitted. The models can also be re-trained and redeployed in reaction to market changes with no impact on existing business processes.

Alula’s Smart Claims solution integrates and automates the expertise, data, and rules engines of the insurer with other third-party data sets, in real-time. This results in improved decision-making that is done faster and with greater accuracy than what was previously possible where human decision makers are involved.

Despite global or local disruptive events, which may affect human movement, and delay their ability to timeously make decisions, the automated processing of claims continues securely and efficiently regardless. Claims automation also provides insurers with the means to apply more consistent claim decisions whilst still accounting for broader risk and ethical considerations. By improving claim decision accuracy and timeliness through these automated processes, the customer experience will also naturally be enhanced.

Following its successful introduction in South Africa, the Alula Technologies Group is expanding the Smart Claims solution globally and has recently launched it in the UK and UAE markets. In this way, Alula is creating the opportunity for insurers to re-imagine their claims processes using advanced automation technologies that incorporate AI.

The global market for embedded insurance – the real-time bundling and sale of insurance at the moment a consumer is purchasing a product or service – is projected to be worth up to $5 trillion by 2030. For South African insurers and service providers, this provides an opportunity to unlock new business models.

Embedded insurance enables any third-party distributor to integrate insurance products and solutions into their own customer propositions and journeys. For example, a car manufacturer that can embed insurance as part of a sale. A bank that integrates life insurance with a Home Loan account. Not only does this improve the overall customer experience with significant additional value, but it also enables the provider to increase revenue.

What differentiates embedded insurance from other products is that it creates a relevant offering for customers when and where they need it most. It is not a reactive purchase or something that requires the customer to search for an affordable insurance solution to fit the requirements of the product purchased.

Overcoming the protection gap

Beyond the market opportunities for embedded insurance, the widening protection gap has played a significant part in making this an attractive option for insurers. From 2000 to 2020, this gap has doubled largely due to digitisation, urbanisation, climate change, and a lack of effective innovation.

Pre-COVID, the average South African income earner had a combined life and disability cover shortfall of at least R2.2 million. This translates to a total insurance gap of R34.7 trillion for South Africa’s 15.6 million earners.

Embedded insurance is a great way to help reduce this gap by offering insurance at the proverbial point of sale. In this way, a consumer can get immediate coverage for the high-value goods purchased.

Part of the process

Consumers can even use mobile banking or medical aid apps to purchase embedded insurance. It comes down to creating an integrated process which the insurance value chain can benefit from in places where consumers already are.

This means people do not have to search for and contact an insurer directly. Instead, they can rely on the partnerships put in place between their service providers and various insurers. Embedded insurance makes the entire process of taking up a policy as smooth as possible, in some cases close to a non-event. It virtually becomes a point and click exercise done within minutes, while the underwriting aspect happens automatically in the background.

Integrated journey

According to Accenture, this app-driven environment can be considered the adoption of embedded insurance v2.5. This is Web-enabled embedded insurance where customers can purchase insurance alongside other digital products like concert or plane tickets.

It goes on to write that ‘while customers are increasingly comfortable with learning about insurance and comparing options online, they are often not ready to make a purchase before consulting with a human agent. If consumers are looking for human touchpoints when purchasing just one insurance product, they increasingly need guidance when combining multiple, more complex products. As the risk of being wrong about the type of coverage they need multiplies, customers want to be able to rely on a single source of truth to help them sort out their exposure and figure out how to be adequately covered.’

This makes embedded insurance a perfect fit for people who almost want a ‘fire and forget’ experience where the insurance purchasing journey becomes completely seamless. Embedded insurance has already become a powerful way to reach new audiences and to bridge the protection gap.

However, if it is to be effective, it must be part of the customer purchasing experience when it comes to third-party goods. This will provide a seamless customer experience that enhances the value proposition of the insurer.

About SilverBridge

With extensive experience in designing and implementing solutions for retail and corporate long-term insurers, including pensions and employee benefits, SilverBridge is one of the largest providers of specialised technology solutions to emerging markets. Its experience also includes the development of artificial intelligence and robotic process automation solutions not only for insurance but also in the banking industry.

Given the myriad of stakeholders along the healthcare journey – from doctors and pharmacists to nurses and hospitals– integrating the almost countless, disparate data sets to get a singular view of a consumer is a complex undertaking. Being able to do so effectively creates significant opportunities for both health and life insurers to better understand and manage new customer applications, develop rich engagement strategies, and gain fresh insights into existing policyholder risks.

Traditionally, the insurance underwriting process has been a complicated, time-consuming process with questionnaires and medical forms to complete. These questionnaires can result in incorrect new business pricing and decisions, and conflict at the claims stage due to potential non-disclosure which the consumer may or may not have understood when completing the original paperwork.

Often, medical tests are required to give underwriters better insight into the health, and underlying health risks, of the person they are insuring. These tests inevitably slow the underwriting process down, bringing substantial cost and decision time delay to the insurer, which ultimately creates a poor customer experience.

 Harnessing the constantly increasing data availability

Technology disruption, in particular, digitalisation of health records, API-based solutions, Artificial Intelligence (AI) and Machine Learning (ML), self-administered and cost-effective testing capabilities such as remote photoplethysmography (rPPG) and genomic sequencing are changing the fundamentals of underwriting. 

The shift to electronic health records is becoming a game changer. As broader sets of health data become more readily available digitally, the ability for the insurer to view historic consumer health records exponentially increases. This, in turn, enables them to better understand the risk they are underwriting. Data sets becoming more readily available include doctor, clinic and hospital visits, medication prescriptions and usage, pathology lab results, as well as data from diagnostic and wearable devices.  Access to this data is not without challenges, due to its fragmented, unstructured and distributed nature, as well as the time and cost of setting up data partnerships with providers.

Here again, technology plays a vital role. API environments are integrated now in even basic IT systems, as are often found in medical and other health practices. Integrating these disparate data sets into a health platform, such as the solution that Alula provides, enables stakeholders to share and exchange enriched data sets which, outside of the insurance vertical, enhances care, diagnosis, and clinical decision-making. The data which can be retrieved through integration includes clinical diagnoses, known chronic conditions, medications taken, as well as historic records for blood pressure, BMI, cholesterol, glucose levels and other important blood markers. Existing consumer data which the insurer may have, is also extracted to be combined with the new, external data sets.

A key element that must be considered when considering the use of electronic health data for insurance purposes is the consent of the consumer. GDPR, POPIA and other data legislations enforce service providers to only use data when consumer consent has been provided, that the data must be treated securely, and only used for the specific purpose (underwriting) that the consumer provided consent for. This consent, however, can be obtained electronically at the quotation or underwriting stage – provided the consumer is properly informed as to the usage of their data and assurances that it will be kept securely and only used for specific risk assessment processes.

Advancements in AI and ML are significant enablers to the underwriting process. Algorithms use the digitised health data records to create scoring metrics which provide underwriters with more insight into the consumer health risk. Individual data sets, using trained ML, are compared to broader population statistics to infer risk of diabetes, stroke, heart attack and others in the future and this insight can be condensed into a single Health Risk Score.  Providing a single score of an individual’s health, whilst taking all known risk factors into account, frees up an enormous amount of specialist underwriting time, which would normally be spent analysing medical reports, self-assessment questionnaires and other, usually paper or manual, data points.

The ability to source, ingest and make sense of historical health data is only one part of the equation. The second is the ability to complement this data processing and decisioning with up to date and real-time health measurements that allows insurers to help their policyholders avoid developing chronic conditions. Diseases such as obesity, diabetes and heart disease cost insurers billions of dollars in claims every year and the ability to mitigate this risk by even a few basis points annually would be substantive.

The ability to proactively, and cost-effectively, test and triage for risk factors in all consumers, rather than only test where a family history exists, allows insurers to manage future risk more effectively, both pricing the risk in at new business but also proactively helping consumers manage their future risk more effectively. Even better when the instantaneous results are factored into the decisioning processes and ongoing policyholder engagement strategies.

rPPG, a technology that measures subcutaneous blood flow, has emerged in recent years as an interesting technology that many insurers are experimenting with. Some of the data points able to be extracted using rPPG include heart rate, heart rate variability, blood pressure, diabetes risk, and other health risk factors. The ability to obtain real-time health measurements and insights from a 30-60 second facial scan enables insurers to classify individual risk without the need for onerous paperwork and blood work. Whilst these risk indicators may change slightly daily, they still provide good insight into the broad individual risk and can be used to determine very early in the underwriting process which consumers should be allowed to apply for cover and which individuals should either be avoided, sent for further blood testing, or to have their policies appropriately loaded.  Further, expectations are that by 2033, saliva-based genomic sequencing will be made available at retail stores to identify potential risk, and to enable preventative treatment of costly and deadly diseases (Celent Insights, Sep 2022). Cost-effective and digital testing will only continue to be available – so insurers need to anticipate how these data points will be embedded to increase efficiencies in their processes, enable better decisioning and enhance customer experiences.

Individuals themselves gain good insight into their own individual health, so there is personal benefit in doing the facial scanning process, especially if this can fast track their policy approval without requiring blood tests to be done. rPPG technology can thus be used at initial point of underwriting, but it could also be used to monitor an individual’s health changes over time alongside wearable and other health data sources. If consumers are incentivised to regularly do a facial scan, they can be rewarded with loyalty offerings or even decreased policy premiums if their health profile changes positively.  Insurers should therefore start to proactively work with the health risk across their book of business and this additional customer engagement should strengthen the relationship between insurer and policyholder.

Intelligent automation – using digital twins to scale underwriting capabilities

The key to leveraging technology effectively though, is to enable underwriters to examine risk profiles and make decisions without physically having to work through the vast quantities of data available.  Making a platform available to underwriters which combines all the disparate data in a structured way and a centralised location is the first step to driving efficiencies. The next step is to enable certain underwriting decisions to be made automatically.

This can be achieved through decision engines which, given the correct parameter inputs, can provide an output decision – provided all the required inputs exist, and the decision engine rules have been set up to cater for scenarios encountered. Decision engines are really a form of RPA (Robotic Process Automation) in that the rules must be setup carefully upfront, and the system will then step through the decision tree structure in a logical fashion, reaching an outcome which is pre-defined.

A natural evolution from traditional decision engines is to use another form of technology known as digital twin modelling.  Digital twins are AI-trained models which replicate human decisions, given specific data inputs and required output decisions. These models allow insurers to model underwriting decisions without the need for complex decision tree structures.

Expert underwriters create a matrix of the data inputs they consider, and sample data is then presented to the underwriter for decisioning. The AI then learns from the expert and creates an algorithm which mimics the underwriters decisioning and this algorithm can then be deployed into the business process as a virtual expert which makes automated decisions on data presented to it. This type of AI embraces human judgement and bias in the decision-making process, something that a decision engine is simply incapable of doing, as it needs to follow very specific rules that have been pre-programmed. These decision models will obviously only ever be as good as the human decision-makers they were modelled on, therefore the best people in a business need to be used when engaging with this type of technology. By modelling the best people within a business means that that insurer is maintaining its underwriting expertise and USP, so a digital twin of one business will not be the same as another company’s. Whilst still relatively new, this technology has been used very successfully in many industries across the globe, including banking and insurance verticals in recent years. 

Making digital data sets available to AI driven algorithms for decisions allows for an automated business process, involving little to no human intervention. Only where a digital twin model is unable to create a decision would a human underwriter be needed to evaluate the data presented, potentially request additional information, and then make a final decision. This end-to-end automated process is something that, until recent years, has only been discussed theoretically. Now that the right technology toolsets are available, this theoretical process is now a reality. 

The automated process described above is equally applicable in other insurance business processes, most notably claims and risk renewal processes, where senior human decision-makers typically need to spend vast amounts of time analysing different data sets and making decisions which are both costly and time consuming. This results in efficiency gains for the insurer and a far improved customer experience for the consumer.

Alula’s offering: combining health data sources, technology solutions and applying intelligent automation for insurers

The Alula solution, which is offered to the Southern African market through SilverBridge and the HealthCloud platform, is an integrated platform which combines access to individual health data, credit bureau information, industry fraud risk and government identification services. Integration to an insurer’s own database and business rules is achieved through exposed Restful APIs. The total data set is complemented with native integration into an rPPG scanning application for real-time health insights. The platform consolidates data sets from all available sources, whether they be external or internal, historic or real-time, and exposes this data to digital twin AI models, enabling straight through processing (STP) of both underwriting and claims decision-making. The health data available through the platform includes hospital, clinic and doctor visits, pathology lab results, medicine usage and pharmacies, wearable device data plus historical health claims.

The data made available through the Alula platform offers an insurer a 360-degree view of the consumer, providing health, credit and fraud propensity risk in a single, real-time API call.  In addition, the ability to create company specific digital twin models, using the best decision-makers in their business, allows insurers to customise their appetite for risk in an automated fashion. The improved accuracy that automating these processes bring, by eliminating the risk of human error, results in financial savings as well as more consistent and higher quality decisions.

The HealthCloud platform is currently being used by 8 life insurers in South Africa and 4 health insurers. Current volumes of health data records accessed through the platform by insurers are increasing exponentially. To-date more than 2.5 million unique Health Risk Scores have been generated. Facial scanning is being implemented by key insurers who are trialling the new technology with an aim to make the new process available to the market in 2023.  The HealthCloud platform speeds up decision-making time on underwriting cases – whether for new applications or claims – significantly. The cost savings per underwriting decision simply by having direct access to consolidated, digital healthcare records is estimated at 50%, given currently available figures. 

The digital twin technology is currently deployed in 4 production insurers in both Life and General Insurance and several other insurers are considering how the technology can be most effectively deployed within their environments. The concept of AI decision-making is still relatively new, as was the concept of cloud environments no more than 5 or 6 years ago. Nowadays, most insurers have embraced cloud and are running their production systems there. Those still on physical infrastructure are all planning the move in the short term and the same will happen with AI decisioning over time. RPA processes have been used for many years, but the shortcomings are now being clearly understood, embracing AI and ML to replace these systems is a natural progression.

This does not, however, mean that there are no challenges to overcome. Insurers and healthcare providers must be willing to embrace change and adapt to a more open and transparent process with clients. Facial scanning needs clear communication with the targeted consumers to illustrate both the potential financial and well-being benefits of this new technology. Without transparency and public education, no real change can be forthcoming. Having a platform that connects to an entire ecosystem of data, solving data interoperability, and providing a unified view of a consumer’s individual health profile, however, delivers strategic value that can help insurers and healthcare providers unlock new business growth and reduce risk across their books of business.

The road to a completely integrated data environment that can positively impact on underwriting and health decision-making is something that should be embraced by the insurance industry. At a time when digital transformation underpins virtually every industry sector, those insurers and healthcare providers who embrace a data-driven, automated, and integrated environment to enhance the customer experience, while making more informed decisions, will be the ones that will be successful.

About Alula

Alula Technology Group provides business-critical solutions to life and health insurance companies. Owned by ROX Equity Partners, who are long-term investors in health and connected technologies, Alula has a combined 30+ years of global-leading, South African expertise that provides solutions for the modernisation of policy administration, the digitalisation of policyholder and channel engagement and the intelligent automation of key insurance business processes. Alula improves underwriting and claims processes by instantaneously harnessing internal and third-party data inputs and cloud-based, real-time processing capabilities.

With more than 30 million South Africans active on social media, insurers have a wealth of unstructured data to tap into. Insurers can effectively ‘listen in’ to their customers, apply predictive modelling, and use the insights to gain a better understand of customer behaviour. In turn, this can result in improved customer engagement and experiences, and the development of more customised solutions that open new growth opportunities for the insurer.

In fact, enhancing the customer experience through an awareness of their preferences and sentiment at any given point in time can add immeasurable value to the insurer. An example of this is if a policyholder posts major life events that can range from getting married, starting a family, moving jobs, or even getting retrenched. The insurer can use this data to identify potential upsell and cross sell opportunities. In the case of a policyholder being retrenched, there might even be an option to provide them with payment breaks on their premium if they qualify.

Clearly, social media and its role in the insurance industry is evolving beyond marketing strategies and personalised ads. It now extends to encompass more advanced risk assessment and improving fraud detection capabilities, all while enabling new customer experiences.

Behavioural analysis

Social media can also be used to monitor customer behaviour.

As far back as 2019, people were cautioned about what they post on social platforms as this could have implications on their insurance policies especially when it comes to underwriting and pricing in the case of life insurance.

This is where technologies like artificial intelligence (AI) can play a significant role. For example, insurers can partner with third-party data vendors that use AI to scrape data from users’ profiles and build predictive models faster than human agents. These models enable underwriters to gain a more detailed assessment of an insured’s level of risk. It is here where sentiment analysis can be used to assess a client’s behaviour and flag any potential risks that require further investigation. Insurers can also use machine vision that uses software algorithms to assess images based on existing data sets already evaluated by humans. For instance, discovering more about a client’s lifestyle, including eating, exercise, and smoking habits.

It will soon become commonplace for local insurers to automate the mining of social media data for more efficient underwriting and claims processing. This must happen within the regulatory framework especially pertaining to the requirements of the Protection of Personal Information Act (POPIA).

Fraud detection

There are more nefarious cases where technology can be used to investigate fraud based on the content that is available on social media. A Morgan Stanley report cited a tool used by insurers to investigate claims throughout the assessment process that examines the social relationships between parties involved – and monitors their activity on the day of the loss to look for red flags.

Moreover, the report also highlights the need for insurers to rethink their customer engagement model. Thanks to the normalisation of connected devices, the opportunity to collect new data sets and assess risk in more innovative ways can transform insurance. When it comes to life insurance, actuarial risk assessments leveraging statistical techniques to structural risk modelling based on real-time observations can be crucial to more accurately underwrite and price policies.

As the Morgan Stanley report writes: ‘Similar changes are likely to be seen over time in health insurance and life protection. Insurers that seize these opportunities are likely to become the industry’s leaders, while those that do not could find themselves disadvantaged as the industry evolves.’

Change for growth

This is perhaps one of the most crucial points – adapt or risk being left behind. By focusing on how social media data analysis can enhance customer engagement, the insurer can develop a journey that results in greater loyalty, trust, and even advocacy where customers promote their positive experiences on their own social pages.

Insurers who therefore create a more personal experience for customers based on the data they share as well as the data that can be analysed from social posts, are the ones that create differentiation. Additionally, they give the customer a sense of comfort in that the insurer sees them as individuals as opposed to just a number in a database.

When it comes to using social media data, insurers need to ensure compliance from a regulatory perspective. While the likes of the Protection of Personal Information Act (POPIA) in South Africa does provide an element of protection, consumers still place a fair degree of trust in insurers when it comes to divulging their information and what that data is used for. Analysing social media data that is readily available online to raise (or lower) premiums must be done responsibly if the insurer is to maintain a positive relationship with the client.

Yes, social media data analysis will serve to inform the insurer about the major life events of its customers to identify opportunities to cross or upsell products and services in more organic ways. Insurers must be willing to embrace this social media data analysis and then act on it. But the business opportunities this can unlock make it something to incorporate throughout the insurance value chain when managed properly and not seen to be breaking people’s trust in the company.