Jun 30, 2015 · 4 minutes

The insurance industry. I mean, need I say more? It’s like a punchline to an almost endless cavalcade of jokes about boring and tedious commerce, standard protocol, and paperwork.

However, one man -- Kuang Chen -- is hoping to bring a little Silicon Valley disruption to the world’s dullest industry.

Chen has recognized that insurance companies are suddenly being threatened not just by traditional rivals but also by tech giants like Google, Facebook, and Apple.  

Yes, you read that right. The life insurance industry, which has been around for almost two centuries -- New York Life itself was founded in 1845 -- is starting to look at the big Internet companies in Silicon Valley and realize that, with the amount of information they gather on individuals, they could disrupt the insurance space if they got the urge. And according to Chen, there are some inklings that they might be moving in that direction.

The basic problem comes down to the existing, tried-and-true system that has been in place for the entire history of the life insurance industry.

As Chen explained it, “Insurance companies are the best at predicting when you are going to die. And the data they use is extremely invasive, you know, like jabbing you in the arm, taking your blood, and sending it off to a lab somewhere.”

“They are just afraid that someone with more data,” he added, “whether that be Google, Amazon, or whoever, is going to come along with their fancy algorithms and do risk pricing better, and so offer better prices for the same premium or offer different products that [the insurance industry] can’t afford.”

Through his company, Captricity, Chen believes he can help -- and he's found an ally in the form of New York Life’s David Castellani. Chen and Castellani want to streamline the long, arduous data entry process that help to make insurance companies so slow and clunky.

“They still do all this manual data entry because it needs to be super accurate,” Chen says. 

“Despite our protests to the contrary, paper is going to be around for awhile,” said Castellani. “In terms of change, both internally and externally through the clients. We have many of our older customers who are still very much paper-based.”

“But contending with [the paper/digital split] as a company is very difficult and a challenge,” Castellani added. “So if you can have this ingestion engine like Captricity do the digitization and sorting and cataloging, it’s actually quite powerful.”

According to Chen, since being founded in 2011, Captricity has amassed one of the world’s largest handwriting datasets. The company uses machine learning and a little bit of human crowdsourcing to create digital records of paper documents, even those that are handwritten. The company is ideal for a wide range of industries, from government agencies, insurance companies, hospitals, schools, and even non-profits -- any organization that has large amounts of paperwork and application materials comprised mostly of customer interaction forms of some sort or another.

“We want to work with the types of organizations that serve everyone,” Checn said.

As New York Life is showing, there are a multitude of potential use cases for Captricity’s technology, even somewhat morbid ones. “In particular, we have actually been using the technology on death certificates,” Castellani said. “We can go back 15 years now and suck all the information on those documents into Captricity’s system and then use that to understand better how to underwrite.”

“We are finding new patterns emerge from these massive datasets,” he added.  “It’s unlocking a lot of information that’s just so manually intensive that we never would have got to.”

Various industries are going to use Captricity’s technology, but for the insurance industry the startup not only serves a purpose -- it may end up saving it in the long run. (Whether that’s a good thing or not is a debate for another day.)

“Whether it’s [from] Google or Apple or Fitbit or Amazon, it really doesn’t matter, but we all know that any sleeping business is prone to disruption,” New York Life’s Castellani said. “Insurance companies have yet to prove nimbleness and agility and they really could get caught short if they aren’t thinking about that now.”

As Captricity’s Chen said, and seems to believe, his company’s products are instilling a sense within the insurance industry -- through big names such as New York Life -- that there is still an opportunity to out-innovate the major Silicon Valley Internet powerhouses before they get into the life insurance space.

“The vision for the insurance industry now is that they can compete with or ward off Google and Facebook.”