John Weber:

How should AI be used to enhance, inforce policy management for the life and annuity sector?

Dror Katzav:

Our company focuses primarily on life and annuity. And one of the things we noticed is people buy policies from agents. Now, because of the turnover in the industry, agents live after two or three years. But, you expect the customer to stick around for 20 or 30 years. And you find yourself in a situation where the consumer owns a product that they don’t understand. The insurance company was never built for services and the agent is gone. So, from a consumer perspective, you’re going to find yourself buying more and more policies from other carriers. From a carrier perspective, the difference between having an agent, or not having an agent is going to be dramatic in the lifetime value of the customer. Using AI and automation, you could create this customer engagement that drives higher lifetime value over time, provides better service, creates the retention, upsell, and cross the opportunities where the customer benefits from having a better product, and insurance company benefits from having a higher lifetime value from their existing customers.

John Weber:

But, why should the insurer even care about this technology post issuance of the policy?

Dror Katzav:

Traditionally, insurance companies spend a lot of money on the first 30 days of the policy, from the point you see a Super Bowl ad to the point you finish underwriting. But then you still need to own the customer for another 20 or 30 years. And in those 20, 30 years, there’s a lot of upside that could be made if you provide the right service. Most of these customers don’t understand the product. You don’t necessarily know what is the right time to convert, what is the right time to take a cash value loan or to surrender, partially surrender, make this decision, that decision. If the insurance company can drive these decisions, they drive better lifetime value on the same risk that they already incur and provide better service that support our customers.

John Weber:

Why do you think this technology is so important to Life and Annuity writers at this time?

Dror Katzav:

I think in the last few years, we saw a lot of volatility and a lot of changes. We had a few years of global pandemic followed by recession, changing interest rate, changing the financial markets. Regulatory exposure on policy or behavior becomes a bigger and bigger issue. From insurance company’s perspective, the only way to do this kind of analysis at this scale with that many customers could only be done with AI and automation of the data processes.

John Weber:

Dror, can you give us a peek behind the curtain? How does all this work?

Dror Katzav:

Yeah, of course. The way we work is we partner with insurance company to get access to the data, and then we use, in addition to that, third party data that we have access to and public data such as demographic and house prices and so on and so forth. We don’t go into the PII level because we don’t want to breach privacy, so we stay as a zip code level or zip plus four level. And we basically run the analysis to tell you what action the customer would make at which point and why. So, for example, who is going to lapse in the next quarter? What is the reason they’re going to lapse? And build you the capability to engage with these customers and put them either in front of the contact center or the agent depends on the right action they want to make.

John Weber:

How has artificial intelligence changed the modeling for life and annuity writers?

Dror Katzav: So, the rule of big numbers is the role of big numbers. 4% has always been 4%. Lapse rate has always been lapse rate. But if you want to drive to the next level and say who is it and when and why that are going to make these decisions, you want to start asking deeper questions on the nuances. For example, with annuities today, we all have annuities that were locked in at a significantly lower rate. 3% was beautiful five years ago. Today, it’s less than what you get from a Fidelity money market. At which rate I’m going to be happy enough to keep the policy without surrendering it? That’s the type of question that you have to use more data and more AI in order to unlock, in addition to the general average games that companies were doing for years.