Thinking in 12 dimensions: How Standard Insurance uses AI to predict behaviour
President and CEO John B Echauz explains how tech is transforming the insurance industry for providers, large and small
John B Echauz is President and CEO of Standard Insurance – one of the largest non-life insurance providers in the catastrophic event -plagued Philippines – and as such, is always deploying innovative new technologies to reduce the company’s costs and mitigate its risk. He discusses how Standard Insurance is using artificial intelligence and data science to improve its services, and why he wants to create a network for all of the company’s customers.
Mrassociates: John, I understand your latest advance is using artificial intelligence in claims processing?
John B Echauz: Yes – it is nascent, but it is something that we must do. All global insurance companies of all sizes – whether they’re in developed countries or emerging markets – are all starting to adapt tools like AI, robotic process automation, machine learning. All of these things we try to integrate into our companies’ operations.
These are all becoming more and more available to companies of all sizes thanks to the cloud. What’s important is, we must have a clear idea of what we want to happen, and a good tech team that can integrate the offerings of suppliers in what we need. So we’re very fortunate to have both, I think.
Mrassociates: Now in your industry, there’s always a certain amount of customer churn, but I understand you’re using data science to help reduce that?
John B Echauz: Yes: we’re very fortunate that we have a very good chief data scientist back home. He began as a CTO of a subsidiary, and he stepped up to take care of our data needs.
What we found was that we used to look in terms of two dimensions – Excel, X/Y axes – and it’s really not possible to make better decisions these days with just two variables. You need seven, eight, nine… 12! How does a human being think in terms of 12 dimensions? That’s where AI and machine learning come in.
So we’re able to more or less predict our expected losses or reserving for insurance. As well as which customers will leave us and which customers will stay.
Once we know who they are, once we know who you are: ‘Oh, you’re about to churn?’ We can give you a call, have a nice conversation, give a better deal if wanted. That’s been working out so far.
Mrassociates: And you’ve also learned a lesson from Amazon?
John B Echauz: Yes – not so much in terms of tech, because we’re very strong in tech. But in terms of what they do for society. They were able to transform themselves into a company that enables entire industries. Alibaba did the same thing.
What we find at Standard is that we have so many customers – corporates and individuals – from all industries in the Philippines. What if we were able to help our customers plug into this entire network? So, our friends become your friends. That might be of some value to customers – not just purely from an insurance perspective, but as a business development and growth perspective.
Mrassociates: We’ve talked before about the urgent need in the Philippines to address the climate crisis; what work is Standard Insurance doing around this?
John B Echauz: A couple of things. I read in a UK publication that if we plant one trillion trees, we absorb all the CO2 in our atmosphere that’s excess. And that’s a large number, but not infinite.
At Standard we are looking to reforest about 100,000 denuded mountains, with only endemic and indigenous tree species back home. What are the benefits? Number one, reduced flooding in the lowlands. Number two, water comes for agriculture in the lowlands as well – that’s really good. Number three, our tribal partners are the ones who will be reforesting and protecting the forest. And number four, it’s a great way for us to partner with developed countries. There are companies – energy companies, fleets – that emit a lot of CO2. It’s a way for them to partner with us, and to help them meet their sustainable goals. We think it’s a win-win-win-win-win for so many parts of society.
We’ve been working on this for two years; it took a while to set up the nursery, to set up the land. But we’re ready to plant again, and we’re looking forward to finding more partners in the UK who would be willing to help us in this endeavour.
Mrassociates: You’re looking for other business partners overseas; what does the future hold for Standard Insurance?
John B Echauz: Well, we love our global partners. We love working with them, we learn so much from them. And I like to think that it’s a mutual appreciation of what each party brings to the table. And we want to look for more partners.
We always try to map out what do the world’s very good insurance companies look like? What do they do? And we benchmark what are we missing. Every day we try to think, what are the things that we can do better? Not just in our risk management, processes; not just in claims, or sales. But even tiny things – what does our office look like, how do people speak, how do the facilities look to customers? Little things like that; it all adds up.
It’s an interesting job, being an insurance company head. We have to watch about a hundred different things, making sure they all work together.
Mrassociates: John, thank you very much.
John B Echauz: Thank you Paul.