Management / How artificial intelligence is giving more control

How artificial intelligence is giving more control

The insurance industry is leading the way when it comes to investing in artificial intelligence (AI) systems. According to a study from Tata Consultancy Services, average spend per insurance company in 2015 was $124million, beating off the consumer-packaged goods and hi-tech sectors.

Simon Tottman, head of insurance research, UK & Ireland at Accenture, agrees that insurance has reached an inflection point when it comes to ramping up AI investment driven by the growth in available data.

“New offerings such as connected cars and homes and telematics are extremely data-heavy, and computing all of this data is beyond the capability of the human workforce,” he says. “It has the potential to unlock completely new products and transform the customer experience as people are very open about receiving advice entirely generated by a computer. The virtual agents and the chatbots are the visible end of the spectrum, but a lot of the investment in machine learning is behind the scenes, streamlining processes and unlocking the data from across the business. Previously companies kept their data in silos but now it can be leveraged to produce better products, save costs and increase revenue opportunities.”

Henry Burton, chief executive of Artelligen, agrees, saying that AI can help insurers better model risk exposures in real time. “Insurance is at present a very static and reactive beast. It sets prices for a 12-month period and only at the end will an insurer say ‘Oh, I got that wrong!’,” he says. “AI could mean an insurance company becomes a more live and dynamic risk-carrying entity with more fluid pricing.”

“Computing all of this data is beyond the capability of the human workforce. AI has the potential to unlock completely new products and transform the customer experience” – Simon Tottman, Accenture

Burton gives it 15 to 20 years for things to reach this stage, however – he contends that insurance companies, despite investing in AI start-ups and their own innovation labs, are by nature unwilling to rush into giving the green light to new systems.

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“Insurance companies do not like taking risks,” he says. “The investment currently is very around the edges of AI. It is a complex, regulated and capital-intensive industry which doesn’t really feel the heat of competition. There will be niches like the health sector which change quicker, but we are very much at the start of the machine-learning journey.”

There are many examples of AI start-ups already making waves. AIMO combines AI and 3D camera sensors to measure and analyse human movement to predict and identify health risks; Aerobotics uses drones to analyse agricultural data to cut crop insurance costs.

Another start-up, Ageas, is working with Tractable, which uses AI to analyse images in motor claims requiring repair. Ageas chief executive Francois-Xavier Boisseau says: “We concluded after a trial that repair efficiencies in a proportion of claims could be realised, enabling cost-savings [and] allowing engineers to focus on more complex matters. As part of the ongoing pilot, we are now moving forward with this project to introduce AI technology that will support our engineers in the verification of the performance of our UK-wide repair networks in managing customers’ motor claims.”

Boisseau believes the greatest potential for AI is in underwriting. “If we bring together big data, the power of digitisation and artificial intelligence we’re going to see an industry that is more efficient and more profitable,” he states. “But we will also be much more transparent from the point of view of the consumer and even of the regulator.”

 

This article was published in our Business Reporter Online: Future of Insurance.
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