Next generation travel insurance

ITIJ 213, October 2018
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Cutting-edge technologies such as blockchain and Artificial Intelligence (AI) are beginning to permeate the travel insurance industry. But how exactly are they being harnessed by insurers? Lauren Haigh spoke to industry experts to find out
 
As a child I read books, dressed up dolls and, God forbid, played outside. Those memories seem a world away now. Technology is everywhere. The children of today are growing up with iPads and iPhones, devices that make my old CD Walkman seem like a historical artefact. Technology is increasingly smart and has found its way into all sectors, not least travel insurance. AI and blockchain are two technologies that are being harnessed by this industry, with a view to making life easier for all involved. ITIJ spoke to industry experts to find out exactly how these technologies are being used, the benefits they bring, and how popular they really are.
 
New kid on the block
Blockchain has demonstrated a great deal of utility in the claims arena, as Jean Ortiz-Perez, Head of Analytics (Insurance and Assistance) at global loyalty and benefits company Collinson in the UK, explained: “Its most common use in the insurance industry right now is claims management, allowing insurers to settle claims significantly faster than through the regular process. It is even possible to settle some claims (low-value claims, for example) instantly.” She also highlighted that AI is proving beneficial in a variety of applications, from fraud detection software and price optimisation engines, to cover personalisation and invoice recognition. “The techniques for modelling can vary from company to company, but essentially most are evolving rapidly towards deep learning and its application to solve a range of insurance problems,” she said.
 
Let's get personal
Digital technology is allowing for the rapid development of the more personalised experience that customers are seeking – it goes without saying that one size does not fit all when it comes to travel insurance and consumers’ needs. “Dynamic customisation is one of the defining features of the modern travel industry,” Robert Gallagher, COO of travel insurer AIG Travel in the US, told ITIJ. “By combining digital technology like AI with human ingenuity and product innovation, the travel insurance industry can deliver a more integrated experience for customers. The very nature of how consumers seek and purchase travel insurance products, and conversely the entire travel booking process, has changed, with an increased demand for a personalised experience.” Gallagher believes these technologies are essential for the travel industry to guide travellers towards the right products and services for their particular trip, budget and preferences. 
Dr Rainer Baumann, Head Group Digital and Information at Swiss Re, a Switzerland-based reinsurance company, agrees. “AI and machine learning technologies are all about extracting insights and patterns from data. This can help insurers make more accurate predictions about consumers’ preferences, and thereby present them with more relevant options and help them chose more relevant products,” he said. He emphasised the importance of such technologies by highlighting that, in the longer run, and provided we have a lot of data available, they will apply to the whole insurance value chain, from better client segmentation, targeted marketing campaigns, accelerated and more accurate risk assessment, and selection, to (semi) automated claims triaging and processing, and automated back-end processes in operations.
 
Getting fizzy with it
One such product that aims to deliver a personalised experience to the consumer is French multinational insurance firm AXA Group’s fizzy.axa. Indeed, AXA is the first major insurance company to offer insurance using blockchain technology. Laurent Benichou, R&D Director, AXA Next, based in Paris, explained to ITIJ: “With fizzy.axa, we wanted to invent a new experience solution. It is insurance with no exclusion, meaning that whatever the cause of the delay, fizzy customers whose plane is late will be compensated. With fizzy, we solved traditional insurance customers’ pain points. But we did not stop there. We added one element of trust: the blockchain will decide if the customer is compensated, not the insurer. In order for the customer to get proof of this additional promise, we had to use a public blockchain, which the customer can track (or ask an expert to track for them).” So, rather than the decision of whether a customer is compensated resting with the insurer, it falls to blockchain to decide, which could mean fairer decision-making that relies purely on the data at hand.
By combining digital technology like AI with human ingenuity and product innovation, the travel insurance industry can deliver a more integrated experience for customers
AIG has its own products that seek to provide a personalised experience, including a new app, Travel Guard on Demand, which was launched in Canada and provides protection and assistance for travellers. It uses technology to automatically start coverage the moment the policyholder leaves their home province and end the moment they return. 
AIG is also making use of AI, as Gallagher explained: “Our presence on WeChat in China uses an AI chatbot that can answer hundreds of questions about product, payment and purchase options. Post-sale, the chatbot can resolve issues related to claims and services and allow users to plan trips and buy travel insurance without ever leaving the app.” 
 
Rising up to the challenge
Sourabh Chatterjee, President and Head – Technology, Direct Sales and Travel, Bajaj Allianz General Insurance Company, India, spoke to ITIJ about his thoughts on AI on blockchain, highlighting the fact that use of these technologies is still in the relatively early stages, but that they hold great promise for the future. “AI has been predicted as a silver bullet to most industry challenges. The technology certainly holds promise and, over time, will evolve to a more mature level,” he said. “Blockchain has vast potential which remains untapped. It can create new ecosystems and tap into the capability of existing ones.” 
The industry is currently exploring the potential of these technologies. Bajaj Allianz General Insurance Company, for example, recently rolled out its Travel Ezee initiative, an automatic claim settlement service whereby, rather than the customer having to initiate the claims process, the process of claim registration and settlement is automated, and the insurer keeps track of claim events and initiates the payout. 
AI has been predicted as a silver bullet to most industry challenges
Ortiz-Perez agrees that blockchain is invaluable in claims settlement: “Blockchain can automate the claims settlement process. For example, a customer has a travel insurance policy and has delayed his trip to Germany until a set date. The insurer will be able to integrate this seamlessly with external airport flight data and, in the case of a flight delay, automatically credit a set amount to the policy holder’s declared bank account. The customer will be able to utilise this money immediately to buy dinner in the airport or access one of the insurer’s partner airport lounges (if offered).”
 
Automated for the people
Technologies such as AI and blockchain are enabling services to be automated in an efficient, trustworthy way, making processes smoother for both insurers and consumers. But are there any drawbacks to their use? 
Dr Baumann highlighted the need for flawless data management to ensure decisions remain fair. “Machine Learning depends on data to train and hone its algorithms. Therefore, appropriate data management practices are crucial, especially in light of recent regulatory changes such as General Data Protection Regulation,” he said. “The problem is that if the information training feed to these algorithms is unbalanced, the system will eventually adopt the covert and overt biases that those data sets contain, which can lead to discriminative decisions.” 
Other challenging factors that Dr Baumann highlighted include the fact that the introduction of AI and machine learning requires new skillsets, which means the industry will need to invest in resources, such as the change management approach. In addition, he pointed out that blockchain-based systems might raise questions with regards to compliance with existing regulations, and that technical aspects such as scalability, interoperability and security will have to mature rapidly to enable the broad-scale deployment of blockchain-based platforms. 
Benichou also predicts possible challenges; namely that AI isn’t always 100-per-cent effective.
“An AI may work for 95 per cent of cases but still need human intervention for the last five per cent,” it stated. The company also highlighted cost and the risk of cyberattacks as potential hurdles.
A human element will always be necessary, explained Gallagher: “As insurers, we are in the business of risk, on a global scale. We need to be ready to assist a customer if something goes wrong at any time of the day or night, anywhere in the world. While new technology can help support this mission, and ultimately improve the overall customer experience, there will still need to be a human element in our industry, especially with the diversity of our customer base, and the variety of differing needs, demographics and trip requirements.”  
Ortiz-Perez is in agreement: “AI lacks the ability to understand complex human interaction and social/professional networking that is not all about data but about life, relationships and friendships. The technology advancements have allowed the development of AI that can undertake a handful of tasks and outperform humans in some cases. However, it is not yet developed enough to resemble one, all-capable AI system. So, rest assured we won’t be seeing any Terminators in the immediate future!”
Despite the potential risks – and fear of a robot superpower – it looks like technologies like blockchain are here to stay and will continue to push the travel insurance industry forward. Gallagher certainly thinks so. “In the future, it will be the norm and no longer the exception for customers to receive relevant, integrated, and personalised insurance options for their specific and unique travel needs,” he said. “The travel industry, as a whole, will be more integrated, with insurance being seamlessly incorporated onto corporate partners’ platforms, webpages and apps.
An AI may work for 95 per cent of cases but still need human intervention for the last five per cent
Blockchain will provide the ability to manage data seamlessly, while transforming how the industry handles claims and payments, saving time and combating fraud.”
 
Let’s push things forward
If we are to presume that these technologies are a permanent addition to the landscape, what will the future of AI and blockchain in the travel insurance industry look like? Dr Baumann said that with the amount of digital data generated constantly increasing, methods for structuring and curating data, extracting insights from this data and using it to make accurate predictions will become more and more important. Similarly, Chatterjee believes technologies are bringing the travel insurance industry to a new frontier. “AI and Blockchain are going to open up avenues in automation and ecosystems, which will eventually benefit the customer. Beyond AI and blockchain, IoT and mobility are making rapid inroads into the travel insurance industry.”
In terms of his company’s future in harnessing technologies, Gallagher said: “At AIG Travel, we will continue to leverage new technologies by being flexible and adapting to evolving consumer expectations while maintaining an aggressive commitment to innovation.” 
These are some choice words, as there is no doubt that, in order to flourish, remain competitive and, most importantly, meet consumer expectations, insurers will need to be willing and able to adapt. Technologies are continually evolving and new developments are emerging that have the potential to both disrupt and enhance the industry, and it is vital that insurers remain ahead of the game and committed to innovation. 
After all, a CD Walkman doesn’t stand a chance against Amazon Alexa. ■