AI and IoT are sweeping insurtech
On the insurtech front, artificial intelligence – in combination with the Internet of Things – is where the money is these days.
A recent report from Accenture finds the combined number of deals across AI (including automation) and the IoT (including connected insurance) increased 79 percent in 2016. Even though the two technologies represented only one-quarter (24 percent) of the 216 insurtech deals globally last year, they accounted for 44 percent or $711 million of total insurtech investment — compared with just 10 percent of global insurtech investment in 2015.
However, AI is just as much a value proposition for established insurers as it is for the brash insurtechs. Within large multi-faceted insurance operations, AI will take many forms, versus a broad, all-encompassing “artificial intelligence” implementation. There is natural language processing, there are virtual personal assistants, there are reccomendation systems or decisioning systems, there is machine learning, and so on. So an AI implementation in insurance needs to be a specific approach that meets the requirements of the process at hand.
TCS recently surveyed 835 executives across a range of industries on this topic, and found most AI projects are still contained with IT departments, providing assistance with detecting security intrusions, resolving user issues and delivering automation.
Looking two or three years down the road, however, executives see AI being applied to a range of enterprise processes. One-third foresee AI helping to guide their sales, marketing or customer service functions. Another 20% see AI playing a key role in non-customer facing corporate functions, including finance, strategic planning, corporate development, and HR.
That’s one level of the AI story, of course. For insurers, there’s an additional level of industry-specific roles and practices that could also benefit from AI.
Driverless vehicles: AI systems make it possible for cars and trucks to effectively navigate any and all highways. In addition, AI can help prevent car thefts, spot potential fraud, and provide insurers a clearer picture of risks, whether they come from policyholders, the vehicles they drive, or the roads on which they travel.
Personalized customer experience: Advanced AI enables insurers to “not only anticipating the needs and behaviors of customers, but also personalize interactions and tailor offers,” according to a report from PwC. “Insurers ultimately will reach a segment of one by using agent-based modeling to understand, simulate, and tailor customer interactions and offers."
Digital advice: Insurers’ AI-based systems will help deepen "understanding of individual and household balance sheets and income statements, as well as economic, market and individual scenarios in order to recommend, monitor and alter financial goals and portfolios for customers and advisors,” according to PwC.
Automated and augmented underwriting: PwC also predicts the "augmenting of large commercial underwriting and life/disability underwriting by having AI systems highlight key considerations for human decision-makers.”
Robo-claims adjusters: AI-based claims insights platforms will be able to “accurately model and update frequency and severity of losses over different economic and insurance cycles,” PwC states. “Carriers can apply claims insights to product design, distribution, and marketing to improve overall lifetime profitability of customers.