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How Artificial Intelligence Drives Contract Management

How Artificial Intelligence Drives Contract Management | Exari

December 28, 2017 Suman Palit Contract Management   Data Extraction  

The Importance of Artificial Intelligence in Contract Management

You are the chief underwriting officer of a multinational reinsurance firm. Your business leadership has just asked you to quantify your organization's global property and excess liabilities as part of an across-the-board evaluation of brokering standards, exposures, and underwriting guidelines. You send your staff off to crunch the numbers from contract data in your data mart, yet you know that any analysis you do is skewed to the point of being useless in its predictive capabilities.

This is because you most likely do not have access to much of the data within these contracts. Answers to questions like "how much liability is tied up in aggregate vs. per event, across geography and cedents going back 10 years?” This data is locked up on paper across layers of contracts, spanning multiple years and jurisdictions. Extracting the data into a usable format requires a level of painstaking review — only to end up with information that was most likely riddled with errors. Not to mention, the endless hours of human review and oversight is not a good use of high value underwriter resources, whose time and skills are put to much better use elsewhere.

How You Can Leverage AI

So, what is the answer? Clearly, the old way of doing things is not beneficial to your business, but what can you do differently?  The answer lies in artificial intelligence, also known as cognitive computing. Tools driven by artificial intelligence, such as Exari Vision, are now available to help. These tools first provide a semantic classification and clustering of relevant clauses and terms within these legacy contracts, telling your team exactly what each contract contains.  However, in addition to these traditional language processing algorithms, Exari Vision takes advantage of advances in artificial intelligence that uses neural network technology, giving it  the ability to detect anomalies in patterns of text. This detection is useful in highlighting potential problems in contracts, something that tends to be difficult for humans, especially at scale.

But artificial intelligence in contract management is more than simply searching contracts for related content and compiling it into clusters. AI can evaluate the text within the contract and draw conclusions about what it actually means and the intent of the text, making it a more effective tool for analyzing the content of the contracts to evaluate risk. Essentially, by using artificial intelligence tools, your underwriters are able to easily compare your company’s contracts to the database of similar contracts, with an eye toward identifying specific clauses and irregularities.

Not only does it search and read what a contract says, but AI also understands the contract and reviews it in the context of the other contracts in the database. Because Exari’s contract management software is equipped with a library of clauses and provisions, the cognitive intelligence features are capable of identifying sections, clauses, and keywords within the contracts, and providing an in-depth analysis of the language, identifying the specific information that underwriters are looking for.

As this new technology becomes available to assist in business decision-making, your organization can focus resources on fixing issues within legacy contracts. In addition, these cognitive technologies can then apply predictive models to the data that’s been extracted from the documents. Armed with this information, you can answer questions around cedent and broker behavior, predict trends within geographic areas, and evaluate other business scenarios. In short, this technology can be used at various stages of your journey towards unlocking information from paper contracts, saving time, increasing accuracy, and improving your business’s overall contracting and decision-making processes.

Customize AI for Your Role

You might still be asking yourself, “But what is artificial intelligence going to do for me? I’m an underwriter, not a statistician!” That’s okay. Specific contract management tools are designed for specific problems, and we at Exari recommend using the right set of cognitive tools in an evolutionary process, from initial description to predictive modeling. More specifically, we use the following process:

  • Describe the data in the contracts, using statistical and genetic algorithms.
  • Diagnose issues in your contracts, using artificial intelligence classification technology to help segregate good terms from bad ones, and neural nets trained to spot anomalies across individual contracts.
  • Create predictive models once the data, terms, and clauses from your contracts are completely digitized and available to your business and data sciences teams.

These steps can be accomplished quickly, with just a few keystrokes within the contract management software. By taking the documents and turning them into data, you spend less time looking for information, and more time analyzing the data that will impact your bottom line.

 Artificial Intelligence improves contract management and simplifies the work for anyone across the enterprise working with contracts. AI has the potential to reduce the amount of time spent on contract management and analysis, while also improving the accuracy of the process. Contracts in general are well suited to automation, and that by implementing cognitive intelligence tools into the process, it’s possible to reduce the amount of time spent on repetitive tasks.

With Exari, you finally have the necessary tools to go back and quantify your organization's global property and excess liabilities with predictive analytics, effectively increasing your revenue and decreasing risk, without wasting time and effort searching for information locked in paper documents.

suman

Suman is Exari's Director of Research and Innovation.