What’s in a name?
Paving the way
When Manulife introduced AIDA to the world, it became the first insurance company to use an artificial intelligence tool to make underwriting decisions. AIDA, which stands for “artificial intelligence decision algorithm,” has been approving Family Term cases with face amounts under $1 million for clients aged 18 to 45 since June 2018.
Quickening the pace
The key benefit to advisors is the speed with which AIDA can make underwriting decisions. “Right now AIDA is doing the work of about five underwriters,” explains Karen Cutler, Vice President and Chief Underwriter at Manulife. “So that basically clears the decks for underwriters’ more complicated cases to get to the top of the pile faster. The goal is to continue to increase the throughput, so the easy, straightforward cases are underwritten without human intervention. This will free up our underwriters to spend more time on the complex cases and start to reduce the cycle times on those cases as well.
“It comes down to customer expectation and customer experience,” Cutler says. “People are buying insurance, especially younger people without any major health issues. I don’t think they understand why a policy would take more than three weeks, and with AIDA we are making decisions faster.” During the fourth quarter of 2018, the entire process will be automated, which will reduce the processing time even further – from next-day decisions to instantaneous decisions in some cases. “This means as soon as a telephone interview is completed and submitted, you could see cases approved right away,” says Cutler.
What is the process?
AIDA is available for tele-interview business. When customers place an insurance application with their advisor, the information comes directly to the underwriting department at Manulife. AIDA processes it, makes the decision and then sends the advisor and the customer a notification with the result. “It’s a very quick, seamless process,” explains Cindy Shirley, Director, Underwriting Research and Innovation.
What is an algorithm?
Algorithms are unambiguous, specific instructions that can solve problems in math and computer science. They are sets of rules that can perform calculations, automated reasoning tasks and data processing.1 AIDA is being used to process the low-risk underwriting cases. “Underwriters are trained and have years of experience. We’re training this algorithm to learn what underwriters do and replicate what happens in the real world,” explains Dave Keirstead, Assistant Vice President, Advanced Analytics, Divisional Strategy.
The story behind the name
And while this is all cutting-edge stuff, AIDA has an interesting connection to the past. “AIDA was named after Ada Lovelace, the first female programmer, who was alive about 200 years ago,” says Cutler. “We added the i to the name simply to make sure people understood it was artificial intelligence. Ada’s claim to fame was the merging of art and science, which is essentially exactly what underwriting does.”
Ada Lovelace, Lord Byron’s daughter, is often regarded as the world’s first computer programmer based on her notes on Charles Babbage’s proposed mechanical general-purpose computer, the analytical engine, first described in 1837.2 A true visionary, Ada was the first to recognize that the machine had applications beyond pure mathematical calculation. She published the first algorithm designed to be carried out by the analytical engine.3
True innovation in insurance
Some other companies would have to rely on a reinsurer to build a similar tool for them, but Manulife was able to deploy its own teams, its own data and its own underwriting philosophies. AIDA is the result of a collaboration between the advanced analytics team, the underwriting team and the pricing team in Individual Insurance. It took 14 months of ideation and development, 500 variables and six months of live parallel testing to create AIDA. “And while some other companies use rules engines – a series of underwriting rules that a case goes through – they are really binary: a yes/no sequence. You’re in or you’re out,” says Cutler. “But the AIDA model isn’t binary, so we are truly the first company to use artificial intelligence.