Article Synopsis :
It’s been said that the insurance industry is standing on the edge of a technology revolution so many times that some finally starting to believe it. Certainly, those in the UK insurance market seem to be getting the message, if this summary report of a roundtable discussion is anything to go by.
There was general consensus that artificial intelligence (AI) and machine learning (ML) will be the catalyst to a fourth industrial revolution – data, following steam, electrical and digital.
But revolution is not an unreasonable assessment as it will lead to root and branch reform of all areas of the value chain.
Rise of the machines
Talk of AI and ML always leads to fears about jobs. Some have said many white-collar roles will be lost to machines take over tasks ranging from repetitive administration up to sophisticated risk modelling and pricing.
Doctors, lawyers and ‘even’ journalists have been flagged as on the cusp of obsolescence, but not all agree. Tibco Software’s head of insurance Adam Goldsmith said AI and ML will augment an organisation’s intelligence, rather than simply replace people.
“It’s about equipping the knowledge workers with intelligence to make better decisions.”
Clare Lunn, general insurance fraud director at LV=, agreed: “It’s getting the right data to the right people at the right time so they can interpret that data to progress a claim or underwrite a policy accurately. It’s not about replacing the technical expertise we have in the industry.”
However, Zurich’s chief claims officer for general insurance in EMEA Ian Thompson said that may be true in the long term, but not necessarily during the transition period which is likely to experience a lot of change in the employment base.
Reducing risk to make life better
Insurance companies must prepare for their whole business model being disrupted as Internet of Things (IoT) and ML reduce the amount of insurable risk because connected devices will increase prevention – of theft, fire, cardiac arrests, falls and even running out of milk and bread.
New revenue streams must be found and this means changing the relationship from a once in a while grudge purchase to one where the customer is central to everything an insurer does and they work together in partnership. Insurers will help consumes make better decisions, reduce risk in their lives and thereby improve their safety and well being.
David Williams, chief underwriting officer at AXA, said: “At the moment, we have this terrible situation where we take some money off the customer and then hope not to hear from them.
“Wouldn’t it be better if we could use real time data from connected devices to minimise risk and then communicate with the customer, provide them with positive benefits and hopefully be able to retain them?”
The conversation then moved on to the impact of GDPR and customer engagement – see the full summary for more.
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Digital Insurer's CommentsThere is increased focus on the claims process as a route to digital transformation and this paper leans on this heavily.
It cannot be done in isolation, but the suggestion that come what may, this new model for claims will be essential has some weight.
Some insurers have already succeeded in automating elements of their claims processes for parts of their business, such as auto, baggage and flight delays.
If we can do some of this now, there will be no excuse for developing this capability when technology – probably blockchain – influences areas such as healthcare claims.
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