InsurTech Ohio Spotlight with Sri Ramaswamy

Sri Ramaswamy is the Founder and CEO of Charlee.ai, providing A.I.-natural language processing based insights and predictions for the insurance industry. Sri was interviewed by Andrew Daniels, Co-Founder and President at CrashBay and Founder and Managing Director at InsurTech Ohio.

Sri, what are you seeing most people in the industry do in regard to Artificial Intelligence (AI) adoption?

“The industry is still in the initial, nascent stages of AI. I call this the pregnant stage, and the baby hasn’t been delivered in my mind. We are still trying to understand how to deliver this baby. Firstly, there’s a technology push that's coming at us at a rapid pace in terms of the Generative Pre-Trained Transformers (GPT), large language models (LLM), computer vision, drone technologies, sentiment analysis, text analysis and Natural Language Processing (NLP).

Secondly, the business side adoption is still being worked out at the strategic level. How does technology blend with the business process? Financial benefits, whether it's top line savings or bottom line savings or top line growth, is still being tested. I'm just beginning to see a more strategic understanding of how and where to best incorporate new technologies.”

What happens if you don't have a clear focus on the customer?

“Technology is moving at a very fast pace, and this industry needs to be cautious because we are a regulated industry. We need to have a clear focus on the customer; that’s what drives our top and bottom line. Any technology that we bring in, specifically AI, will cause change in processes and job descriptions.

If you don't have a clear focus on the customer, you could be spending a lot of money on the technology and implementation without deriving any benefits. That's why I always say, ‘Focus on your customer.’ Let’s say I want to reduce the cycle time of claims that don't involve any bodily injuries. It's just physical damage to the car. Implement technology & process changes that can get the car repaired and out faster if there are no bodily injuries. If you start with a goal that's focused on the customer, then you work backwards to identify all of the processes that need to be enhanced and people that need to be enabled for the Return of Investment (ROI), which will also help reduce litigation and loss adjustment expenses.”

How important is early education about insurance and technology in the industry?

“We take a lot of interns (including fresh graduates) and then convert them to full-time. Recently, I've asked a couple of them to do surveys amongst their own friends. I told my employees that they can create their own questions. The goal of the survey was to test how many of them knew about insurance, claims and fraud. Were they involved in their insurance-buying process? Do they know anything about the claims process, and what do they think about fraud? I told my employees the basis for the survey is to understand this.

They did the survey among an age group limited from 21 to 26. What was interesting was that more than 67 percent of the folks that said that they didn’t know anything about insurance claims, said that they were actually okay with committing fraud or with fraud in the insurance industry. Many of them almost detested insurance companies. What was very interesting to me was the fact that many do not know how the industry works; they based their judgment on negative headlines that they saw regarding the insurance industry. You are okay with fraud without understanding that it impacts you at the end of the day.

After seeing this, it became clear that education about industries that form the basis of everyday life need to be taught in schools. People have to understand personal finance and how insurance works for them to be able to pick a career, or at least respect the societal setup that becomes the backbone of many industries. So, education at a very young age is important.”

How do you allow for change to happen in the industry?

“If you put somebody in the same place, doing the same thing for a long period of time, they tend to burn out, get complacent or too comfortably insecure. That's why you need to allow for change. The best way to allow for change is to understand biology. As you get older, you are going to want to expand personally and/or professionally. You're also going to not be able to or not want to work as much as you did when you were younger. You may also want breaks and to live a life or do other things. This just means you have to allow for change at the workplace to happen for somebody else to take charge. Succession planning is important. Unfortunately, our industry is such that we punish risk takers, rather than encouraging them. We don't celebrate small wins. All this prohibits us from being comfortable with change, and we view change as being independent of life.

That mindset needs to change. It starts with accepting that life changes every second, and change is what enables life. People have evolved without being conscious about it; evolution is change. You've already allowed for change to happen. Now, it's time for that same change to percolate into your work environment consciously, so you can flourish and you and the others can move up the chain. That's the natural evolution process. Whether we like it or not, it’s the natural way, and it allows our kids to thrive and grow too. Human evolution has been possible because of our intelligence and adaptability. Curiosity, adaptability and flexibility are key to letting change happen naturally.”

What's on the horizon for the insurance industry?

“A few things are on the horizon for the industry as I see it from a consumer lens. First, as an industry we are talking a lot about predicting and preventing these days. We must also focus on cost-effective processes to provide inexpensive insurance products that can be easily understood with little room for litigation. Without risks, insurance would be more of a commodity. Low-risk or no-risk insurance products need to be priced, sold and serviced through inexpensive operations, otherwise profitability will be a challenge.

Yes, we bring in a lot of technologies such as IoT, AI, etc., which are important as we move forward. Cutting back the technology is not the answer. Move with the technology and rethink an insurance landscape that embeds re-engineered insurance micro-products backed by tech-enabled processes that are sustainable, profitable, inexpensive and scalable.

Second is API and microservices. You're not going to be able to do it all on your own. Bring in as many partners to look at APIs. If you look at retail, telecom or any other industries, that's how they have evolved. If you look at banking today, I can log into any of the sites, and all I have to do is allow for the bank details. There's easy third-party integrations, and I don't have to do multiple things anymore. I can do everything just with my bank account. We never thought that would happen, and it’s going to happen in the insurance industry. We have to be prepared for the right partnerships for the right products and for the right servicing of those products.

Third is rethinking claims. What’s it going to cost you to service a claim? What’s it going to cost you to provide a service through the life of the claim? Who are the various partners that would be needed to service the claim? What technologies can help with effective and inexpensive claims management? What kind of training and skills would be needed for the next generation of claims team? All of these things need to be a part of claims planning and strategy. Your end user is a very market savvy person that purchases insurance not because they like to but because they have to. Many find insurance contracts very confusing, which is why they despise the claims and distrust insurance. This also means many will evade coverages, inflate claims and bring in attorneys, which will only make claims and claims process more difficult and expensive.

Lastly, the industry needs to do a much better job in marketing the good aspects of insurance. That's not happening. It's like 10 to 25 percent of claims are supposedly fraudulent, but 75 to 90 percent of your claims are good claims. This is the reason why people buy insurance. Why are we not going back to these honest policyholders and educating them? Why are we not communicating to everyone regarding how many claim payments have made lives for many after they face losses? How many are aware that insurance supports innovation in all of the other industries. Had insurance not been there, open-AI and many companies such as shipping, manufacturing, retail, restaurants, hospitality, etc. would not exist. There’s a huge opportunity for the insurance industry to focus on educating people about the positive aspects of insurance. Encouraging a stronger emphasis on promoting the benefits of insurance could be a promising direction for the industry's future.”