It was reported not too long ago that a Tokyo-based personal insurance company announced it would replace 34 workers in its claims department with an artificial intelligence system based on IBM’s infamous Watson. The system “will be tasked with reading medical certificates written by doctors and other documents to collect information necessary for making payouts, such as medical histories, length of hospital stays, and surgical procedure names,” according to an English version of an article in the Japanese daily The Mainichi.
The future of Artificial Intelligence (or AI) in insurance, and indeed in the world as a whole, has created polar-opposite responses. Some view AI as a quantum leap in efficiency that should bring down costs and make the world a better place; while others believe it will be the doom of mankind, or at least of the insurance business as we know it.
More sophisticated systems are on the way and market researchers expect to see AI creeping into customer service and higher-level aspects of insurance. In an article published last year, Price Waterhouse Cooper predicted that the use of AI will make insurance more “personalized” by working in granular data about individual customers, with tracking, algorithms, easier filing, etc. Most importantly of all, more and more losses are and will continue to be prevented.
In another Bloomberg article entitled “Machines Will Save the Insurance Industry” stated that insurance companies are running out of ideas, and the only thing that will save them is investment in fintech, the financial services side of the burgeoning AI filed. Rock-bottom interest rates have sapped returns and forced insurers to cut costs. According to the article, big mergers may be the most tempting route to scale and cost-cutting opportunities but they’re often difficult to execute. Making underwriting and claims handling more automated will let insurers cut staff numbers, one of their biggest costs. For insurance bosses, it’s technology that will bring the real edge in the long term.
The bigger story may simply be that computers are making insurance more precise, which sounds good, but less human, which sounds scary. “That Terminator is out there! It can’t be bargained with. It can’t be reasoned with. It doesn’t feel pity, or remorse, or fear. And it absolutely will not stop… ever, until you are dead!” Well, only if it is an actuary!
Thank you all very much, and I look forward to hearing from you.