The future of insurance lies in human/machine teams
AI can bring huge benefits to the insurance industry. But for that to happen, industry leaders need to start approaching tech with a team mentality.
Robots, so the popular narrative often goes, will one day rule the world, with us humans toiling under their yoke. Indeed, such illustrious thinkers as Elon Musk and Stephen Hawking have envisaged such sci-fi-esque possibilities.
But before we get carried away, let’s remember two things. First, nobody really knows what effect artificial intelligence (AI) and robotics will have on humanity, the workplace and on the insurance industry. We hope, of course, that the impact will be positive.
A 2016 report from Deloitte found that the U.K has enjoyed a technology-driven shift from low-skill routine roles to higher-skill non-routine roles. More than 800,000 jobs were lost between 2000 and 2015, but nearly 3.5 million were created.
And second, we need to keep some perspective here: We’re talking about insurance, a sector not known for its willingness to embrace change at speed.
Only 2% of insurers worldwide have already seen full-scale implementation of AI in their business, according to a 2018 Capgemini survey. A further 34% considered their AI use to be in the ‘ideation’ stage, with only 13% in use-case testing.
All of this indicates that we don’t need to head for the bunkers just yet. Far from presenting us with an existential threat, I believe that AI, when utilized properly, can and will bring huge benefits to the insurance industry and business in general.
But for that to happen, we need to start approaching tech and AI with a team mentality, finding ways to work with them rather than simply taking them up as tools. We already collaborate daily with tech, AI and robotics in our personal lives, but when it comes to business, we don’t seem to have the same approach. That needs to change.
Insurance is a conservative industry for the most part, so it’s no surprise that it hasn’t been revolutionized by tech in the same way that many other sectors have. But insurers are struggling to make money, so there is a real imperative for change.
Although the profile of that change will vary, what is clear is that organizations that focus on human/machine collaboration will have an edge on competitors.
A 2018 report from Accenture claimed that financial services firms could expect a 32% revenue boost over five years through investment in AI and human/machine collaboration. And with 69% of U.K. business leaders expecting the share of roles requiring collaboration with AI to increase in the next three years, the race is on to secure the benefits.
So what does this collaboration look like? Obviously, it depends on the sector, but one area where insurance is doing it well is in tackling fraud. As the front-end sales journey becomes increasingly automated, anti-fraud activity has had to keep up, with analytics and AI playing a key role in identifying fraud in a faster-paced world.
Insurers have not just plugged in the tech and let it go find fraud. The machines alert users to emerging patterns or suspicious activity, but they don’t actively catch fraudsters. That is still the role of humans in this partnership. And as those humans learn from what the tech discovers, that knowledge is fed back into the machines to help them adapt to changing fraud patterns. This is a mutually beneficial relationship – without one, the other could not do its job.
But for the industry to really make the most of what AI can offer, it needs to find ways to collaborate like this across the business spectrum. The online retail world, where the presence of machines is nearly ubiquitous, is leading the way here.
In the insurance industry, by contrast, where machines have largely been used to soak up menial, time-intensive tasks, we see huge under-use of their potential
By embedding AI, analytics and robotics into the core sales and claims processes with a view to human/machine collaboration, insurance has a real opportunity to replicate retail’s highly valuable customer experience.
Tacking these tools on to existing processes has its benefits, there’s no denying that. But to realize the full opportunity, insurance firms need to start thinking about AI and robotics in a much more fundamental, strategic way. They must move on from being users of tech to become their true partner.
Dennis Toomey is global director, counter fraud analytics and insurance solutions at BAE Systems Applied Intelligence. Toomey brings nearly 30 years’ experience as a subject matter expert and trusted advisor on insurance fraud to BAE Systems. A Certified Fraud Examiner in the U.S., Toomey has held senior positions at SAS, Accenture, the Security Intelligence Insurance Practice, Liberty Mutual and LexisNexis. Toomey offers a diverse skill set of management, planning, and marketing across fraud detection and investigation solutions for the global property, casualty, life, and disability insurance markets.
The opinions expressed here are the author’s own.
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