By: Sudheer Krishnankutty, Senior Consultant, Insurance Consulting Group, LTI

Biometric technologies have been used to identify and authenticate an individual based on a set of identifiable and verifiable data unique to the individual. However, few biometric technologies till recently have evoked a sense of awe, and at the same time, raised profound concern and reactions in the Life Insurance industry as Facial Analytics.

Facial Analytics (FA) – a part of biometrics – is a technology capable of identifying people from their digital image. It is part of emerging science and advanced analytics that leverages image processing technologies, AI and big data to analyze a person`s image and derive valuable information that can be used for accurate decision-making. Today from a selfie, FA can examine hundreds of points and thousands of regions on the face from which it is not only possible to estimate Age, BMI and Gender, but also detect diseases and predict longevity!

Let’s explore the areas of application of this technology in the Life Insurance value chain:

Changing the face of underwriting

In the traditional risk assessment method, a life insurer’s standardized questionnaire provided adequate information. They also gather other data with your permission to get insight beyond the information you supply on the application to ensure that the risk selection was not adverse.

Underwriting based on a selfie, coupled with a scientifically formulated reflexive questionnaire predicting accurate life expectancy and minimizing adverse selection, would be more effective than the current techniques of risk assessment. It considers data and factors that are more predictive about an individual’s future health and longevity.

Enhancing customer engagement and experience

Today’s customer is looking for ease and agility while not compromising on the quality of the experience. Facial analytics with the ability to speed up quoting and issuing process for the consumer, while also providing an element of gamification, creates streamlined onboarding experience with a very quick turnaround time (From Prospect to Policyholder in minutes – now compared to weeks earlier). This is an innovative way for the insurance company to engage with their policy holders and create a memorable experience.

Potential fraud detection tool

FA understands every multi-layered element within images and videos in the same way as humans do. But what is fascinating is that it will soon take facial recognition to a new level by being able to detect emotions – more specifically suspicious behavior. This has the power to transform the way insurance companies process claims, assessing their validity more scientifically and accurately than ever before.

Systems can analyze individual response and micro-emotion reactions to the question, and deliver an assessment of their veracity to the insurer instantly, so that suspicious claimants can be flagged for further investigation.

Key disadvantages

However, facial analytics technology today is far from perfect, there are real and valid concerns regarding its accuracy, bias, privacy, and how the technology can be derailed.

In fact, a study done by MIT researchers uncovered much higher error rates in classifying the gender of darker-skinned women than for lighter-skinned men, which has cast a shadow on its effectivity. Another significant flaw that could derail this technology is that while it can detect when makeup has been used to cover up the signs of aging, it cannot currently detect evidence of plastic surgery.

Data privacy and regulations

Also, the technology creates a novel challenge regarding privacy. FA systems store data as complete facial image or as facial template which are considered as biometric data and thus personally identifiable information. The concept that a selfie can reveal private health information is relatively new, and privacy regulations and practices are yet to catch up.

Countries like Europe and the UK have GDPR protecting the privacy rights of the consumers. Many states in the US have regulations that limit uses for which consumer biometric data can be collected and the prominent among them – the California Consumer Privacy Act (CCPA) effective from January 1, 2020 – is widely regarded as a model for a federal data privacy law.

The way ahead

Despite these concerns, FA is set to revolutionize the life Insurance industry through faster and more accurate risk selection. This would lead to more realistic premiums, prevention of fraudulent claims, lower costs overall for customers, and in turn a better bottom line for life insurance firms.