What you need first, before chatbots and blockchain

Canadian property and casualty insurers must address their IT data collection systems in order to profit from more IT glamorous solutions such as chatbots, blockchain, artificial intelligence and the Internet of Things (IoT), says Sven Roehl, who facilitates The Cookhouse Lab in Toronto.

The Cookhouse Lab is an insurtech open innovation lab, a forum in which Canadian property and casualty insurance companies can develop IT solutions. Roehl says insurers are already working on data integration and cloud solutions, but the question is, “How far along are they?”

Data integration is a big issue, because insurers still have legacy IT systems operating in silos. For example, an insurer may be using a different IT solution for home insurance than they are using for auto insurance—and yet they are advising customers to purchase both.

“That’s where [insurers with siloed IT solutions] really struggle, because they don’t have a complete view of you as a policyholder,” says Roehl. “This requires big work on the IT side and is everything that is necessary to get ready for the future.”

Among the technologies of most interest to insurers at the Cookhouse Lab, chatbots, blockchain, artificial intelligence, and the Internet of Things (IoT) are topics attracting a high degree of interest. But they require insurers to have a seamless data solution in order to collect and manipulate online data from Canadian consumers.

“Chatbots are definitely one of the rising technologies,” Roehl says, referring to bots that are integrated into messenger services like Facebook, in addition to voice recognition systems like Alexa. “If you want to be able to communicate with a chatbot, you have to be able to provide the information to such a chatbot, technically, and that requires that you already have some online access.”

The Cookhouse Lab has already seen insurers develop a chatbot for claims management. Beginning in the New Year, insurers have started working on a blockchain project that fully automates aspects of the travel insurance process.

“Blockchain is of interest [to insurers], particularly all of the topics related to so-called smart contracts,” says Roehl. “An example that we see in P&C right now is travel insurance.”

A blockchain is a network of computers with an identical copy of a database. The database records are changed by a common agreement based on pure mathematics, not by a central server or agent.

Developed on the blockchain, smart contracts are self-executing contracts. The terms of the agreement between buyer and seller are directly written into lines of digital code, which facilitate, verify, or enforce the negotiation or performance of a contract.

Roehl says Canadian P&C insurers are now working on a simple example of such a blockchain project.

“Let’s assume you have insurance coverage that offers you money back if a flight is delayed longer than 90 minutes,” Roehl says. “You have this kind of insurance currently, but as a policyholder, you need to prove the delay and make sure and get in touch with an insurer to get a couple of hundred bucks back.”

In the blockchain version, a third-party provider is integrated into the chain — for example, a flight system that shows when the planes land.

“Let’s say your plane had a delay of 120 minutes, so you are due for a claims payment,” says Roehl. “The [blockchain] system can automatically pay out the claim. There’s no human interaction necessary. It’s completely automated.”