Artificial intelligence will change industry but majority of execs foresee opportunity, according to survey

Although there is a fear that the advent of artificial intelligence (AI) may result in an increasingly automated world with job replacements a possibility, an overwhelming majority of re/insurance executives see this phenomenon as an opportunity for their industry, according to an online survey of Intelligent Insurer readers.

AI has already taken centre stage several times this year, firstly because of alleged job cuts at Fukoku Mutual Life Insurance, which implemented a system that calculates pay-outs to policyholders and apparently possesses the “cognitive technology that can think like a human.”

This was followed by peer-to-peer US insurer Lemonade going public with its claim of a ‘world record’ for the speed of paying a claim, thanks to the use of AI.

The poll, which asked whether executives see AI as an opportunity or threat to their job and business in the re/insurance industry, showed that 89 percent saw it as an opportunity and 11 percent perceived it as a potential threat.

Several respondents were in agreement that the automation of routine tasks and streamlining of the underwriting process would free up opportunities, allowing more creativity within the industry, but also for more sophisticated analyses that are not possible today due to resource constraints.

“Every tool, from fire, to rock-on-a-stick, to geometry, to longitude, to steam power, all of it, has always made life better. No reason to be different this time. Just another tool, same as 'big data' which only meant we don't need so many of RA Fisher's approximations for 'small data,’” one respondent said.

While some job losses were seen as inevitable, the fear that it could replace more technical and analytical roles was dismissed by a few of the respondents, at least in the short to medium-term.

“For evaluation of a claim within the policy terms and conditions or for interpretation of the special notes on the policy in order for to decide whether the claim is under coverage or not, you need more than an artificial intelligence,” one said.

Another added: “It will be many years before AI is clever enough to replace humans in very technical roles. Therefore, skilled people such as me will not be under immediate threat.Meanwhile, AI will enable much (if not all) of the simple, mundane tasks that prevent people having time for 'blue sky' thinking to be handled more efficiently than at present.”

The roles that require more of a personal touch were not seen as under threat, such as with broking. “Robots cannot develop personal relationships. Broking will likely remain dependent on these relationships for the foreseeable future,” a respondent commented.

Of the respondents who voted that AI was not a massive opportunity but rather a threat, many cited the lack of human interaction as detrimental to the re/insurance industry.

“Unfortunately losing the human touch will not endear business to people who would rather appreciate the face value time which is already rather limited,” one said.

Another had seen it as an opportunity, “but only if the AI is really capable of the tasks, which given the infinite variance with which humans will interact with it, almost makes it impossible.”

When it comes to claims, while the streamlining may be seen as a benefit, there was the view that this may result in frustrated people who feel their claim was judged unfairly in a snapshot kind of way, that may result in insureds to feel cheated and misunderstood if given a robot to talk to.

“Although it would not be likely to steal my current job, I believe it will cost the insurance industry more in claims that need more analysis. For example, the care that claim adjusters give to making sure costs are in line can cut down hundreds of dollars per claim. If you multiply this by thousands of claims, then there may be millions of dollars in savings,” one respondent said.

“Human adjusters are also adept at recognising red flags and also reasoning through the red flags to determine the truth so that the customer is treated humanely and fairly rather than in a cookie cutter ‘no excuse, Sir/Ma'am’ way.”

While the responses painted a very clear picture of AI as an opportunity within the industry, the comments were far more varied, saying that the reality is that it is more a bit of both.

“It will enable our business in the long run to be able to deliver our services to our clients more quickly and accurately. But until we get there we will probably experience some disruptions both internally and externally. Change is always disruptive and effects people in different ways,” one said.

Another added: “As ever I expect there will be winners and losers in the implementation. Insurance businesses are often terrible at innovation, so I fully expect this to be similar. Even when implemented I think we will be a long way off using it well to manage risk.

“There will be major winners and losers from the carrier perspective, slow adoption and poor implementation will have devastating effects on badly managed businesses that cannot work out how to get away from their legacy systems and processes.”

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