AI Blockchain Underwriting System for SME Liability Risk
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Solution Overview
Problem
The commercial insurance underwriting process for management liability policies is lengthy, typically taking 4-6 weeks, and requires complex, multi-page applications, which can be cumbersome for small companies, whereas consumer insurance processes are faster and more streamlined.
Innovation Solution
A system combining artificial intelligence and blockchain technology to analyze answers from a standardized questionnaire, reducing the underwriting process to minutes by transforming the management liability risk selection into a pattern recognition problem, utilizing databases for risk assessment and real-time data from social media and news sources.
Engineering Contradictions & Design Principles
Engineering Contradiction Analysis
1Loss of time
If traditional manual underwriting process is used, then risk selection accuracy is maintained through human expertise, but processing time increases to 4-6 weeks
Solution Approach 1:
The patent replaces the manual mechanical underwriting process with an automated computer-based system that uses machine learning and artificial intelligence to analyze risk factors, process applications, and generate quotes, thereby eliminating the time-consuming manual review while maintaining or improving accuracy through consistent algorithmic evaluation
Solution Approach 2:
The system enables self-service through automated risk assessment where the computer system independently evaluates applications using pre-programmed risk factors and machine learning models, eliminating the need for human underwriters to manually review each application while still providing accurate risk selection
2Reliability
If comprehensive multi-page applications with 40 questions are used, then risk assessment completeness is improved, but customer experience and ease of operation deteriorate
Solution Approach 1:
The system extracts only the most critical risk factors from the comprehensive application, using machine learning to identify and prioritize the 10-12 key questions that provide sufficient information for accurate risk assessment, thereby reducing application complexity while maintaining assessment reliability
Solution Approach 2:
The system uses partial action by collecting only the essential data needed for risk assessment rather than all possible information, leveraging machine learning algorithms to derive comprehensive risk profiles from a streamlined set of questions, thus improving ease of operation while maintaining sufficient reliability
3Productivity
If standardized questionnaire with 10-12 questions is used, then processing speed increases to minutes, but data collection comprehensiveness may be reduced
Solution Approach 1:
The system performs preliminary action by pre-programming the identification of critical risk factors and weighting schemes into the machine learning model before deployment, allowing the streamlined questionnaire to capture all necessary information through strategically selected questions that have been predetermined to provide comprehensive risk assessment
Solution Approach 2:
The system changes parameters by using machine learning algorithms to dynamically weight and analyze the responses to the 10-12 questions, transforming the limited input data into comprehensive risk profiles through sophisticated parameter adjustment and multi-factor analysis that extracts maximum information from minimal questions
Data Source
AI summary
A system and method to manage liability risk selection in the Small-to-Medium Enterprises business sector facilitates the insurance underwriting and delivery process using a combination of blockchain and Artificial Intelligence technologies. The approval process and the insurance rates are determined using a process that analyzes the answers of potential insureds in response to a set of questions designed by insurance experts to evaluate the performance and the value of the potential insured's organizations. The system also obtains information from social media and news data relating to the businesses of the potential insureds. The system enables an insurance broker to provide real time product delivery and collaboration through a private permissioned blockchain platform. The system and method provide a comprehensive and unique insurance underwriting and policy delivery solution that provides stable rates and rapid turnaround, in several minutes compared to several weeks using conventional insurance underwriting processes.