AI – friend or foe for the insurance industry?
From medical diagnostics and cars that drive themselves, to search engines and virtual assistants, this is the artificial intelligence age.
Insurance is one of the lesser known areas where AI will increasingly dominate in 2017 and beyond.
This is because AI has profound implications for insurers in terms of improving efficiencies and automating existing customer-facing, underwriting and claims processes.
AI will also assess, and underwrite emerging risks and identify new revenue sources.
As Life Insurance International (LII) highlights, AI is already impacting the life insurance sector – and depending on your perspective – it can be a friend or foe.
Japan’s Fukoku Mutual Life Insurance, for example, reportedly plans to reduce the headcount in its payment assessment department by introducing an artificial intelligence (AI) system to improve operating efficiency.
The insurer will introduce an AI system based on IBM Japan’s Watson, which according to IBM is a “cognitive technology that can think like a human,” and can analyze and interpret data, including unstructured text, images, audio and video.
It is said the Japanese insurer’s AI system will be tasked with reading medical certificates written by doctors and other documents to collect information necessary for making pay-outs, such as medical histories, length of hospital stays, and surgical procedure names.
Fukoku Mutual Life Insurance is no lone maverick though and other major Japanese life insurers, such as Dai-ichi Life Insurance Co and Japan Post Insurance are said to be either using an AI system or looking to install one.
Big data challenge
A major challenge for insurers is extracting value from the huge amounts of data they have accumulated, and is continuously growing.
The appeal of an AI system to insurers like IBM’s Watson, which can analyse and interpret data, including unstructured text, images, audio and video is therefore obvious.
For example, the system could enable an insurer to create chat bots that engage in dialog with consumers.
DreamQuark and AI
Data analytics company and French start-up, DreamQuark, has told LII that healthcare and insurance players have stored an enormous amount of medical data that could provide a comprehensive view of both the causes and the consequences of health disorders.
DreamQuark aims to address these trends by developing deep-learning technologies that analyse a wide variety of data types and create artificial intelligence dedicated to healthcare and insurance.
It has developed a platform, called “Brain”, to offer the opportunity to major insurance and healthcare companies to take advantage of the precision of these new algorithms while relying on a secure infrastructure specially designed for healthcare and insurance.
AI promises to play a big part in the insurance industry over the next 5 years. And like all revolutions, there will be winners and losers.
But is it really progress when people lose their jobs to machines and algorithms?
Insurers and financial companies must also be careful to avoid becoming over-reliant on AI because anyone who has studied computer science knows ‘put garbage in and you get garbage out’.
There’s certainly a place for AI in insurance, but let’s hope that’s not to the detriment of face-to-face interaction, which is so fundamental to financial planning and advice.