Artificial intelligence (AI) is extraordinarily popular if you are judging by today’s insurance headlines. And, if you are like me, your inbox is full of email with subject lines that include the words machine learning, AI, and natural language.
The reality is that the headlines and the email have outpaced the practical insurance reality. Relatively few insurers have begun production or even full-blown research at this stage. Even though there has been a lack of progress to date, it doesn’t mean insurers can afford to ignore AI.
AI is not just better technology. Its intrinsic value is not faster processing, bigger data sets, or even thousands of rules rigidly applied. These advances have yielded powerful results, but they’re simply performing old tasks better. The bigger advantage is that AI can provide probabilities and insights from diverse and ambiguous real-world inputs.
Today’s principal business justification for AI lies in cost reduction, but it can also mitigate risks and increase revenues primarily through improving customer experience. Today’s AI is not yet ready to replace humans; instead, it will augment them, letting them move into more value-adding activities, freeing them from rote actions, making them more efficient, and performing calculations that would be physically impossible for a single person. Celent takes a rosy view of AI in insurance; for those who embrace it, AI will over time provide a better experience for customers and employees while delivering real business value on every dimension.
The aim of my recent report, Artificial Intelligence in Insurance: Starting at the Beginning, is to demystify AI by providing a lens through which to examine the forms of the technology that may be most useful for insurers. AI isn’t a single technology in and of itself.The report discusses the enabling technologies, their applications in insurers, and the impact that AI can make, in terms of both business value and other areas within insurance where it can make a difference.
For those of you who think you are lagging, the good news is that you are not. There is still time. But there is no time like the present to formulate a strategy to deal with the opportunities that AI promises and to get a head start on your competitors.
This blog entry was reprinted with permission from Celent.
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