Is There a Business Case for AI in Insurance?
According to Forrester, AI investment grew 300 percent from 2016 to 2017. As for next year (from 2017 to 2018), a Narrative Science survey said the number of enterprises using AI is going to climb from 38 percent to 62 percent.
However, there are instances where AI just isn’t the tool for the job. Forrester said that sometimes there’s no business case for it (42 percent), its usefulness is unclear (39 percent), or it doesn’t have the capability for a specific task (33 percent).
In other situations, the case for AI is obvious, but the business in question simply doesn’t have the data management platform to support it (29 percent). In these cases, those businesses that choose to modernize their platform are opening the door to AI, positioning themselves to start leveraging its benefits.
How about AI in insurance?
Until recently, one of the sub-sectors of financial services that has been somewhat outside of the AI trend has been property & casualty insurance. That is now beginning to change according to insurtech thought leaders Chris Bishko and Pearl Chan.
Potential applications extend across the insurance chain: product development, customer acquisition, underwriting, claims, account management and renewals.
For example, the startup Zendrive uses smartphone sensors to discourage drivers from using their device behind the wheel, an important risk factor in auto lines. The chatbot startup Lemonade uses AI to provide “instant home insurance.” The analytics startup Cyence uses AI to quantify risk for cyber security policies. And the startup Captricity uses machine learning to digitize handwritten records in any line.
As we reported earlier this year, AI-powered chatbots enable payment collection, cross-selling and claims service in most venues including Facebook Messenger, Snapchat and Skype.
First to the future
As Marc Benioff, CEO of Salesforce says, “As a company you need to get to the future first, ahead of your customers, and be ready to greet them when they arrive.” At the Dreamforce 2017 conference in November, Benioff spoke of the “fourth industrial revolution,” in which intelligence is at the center of everything. In this age, AI steals the spotlight providing data about every aspect of customers’ buying journey and ongoing experience.
Insurance is an industry notorious for its resistance to change. While other industries have, by degrees, evolved with the times, insurance has held out against innovation. We have not “gotten to the future first.”
Interestingly enough, that’s why we’re anticipating so much change now. Because insurance has moved so much more slowly than other sectors, it has the greatest distance to catch up: i.e., the greatest potential for improvement.
While consumer adoption may admittedly take some time, insurers who update their legacy policy administration systems; deploy, test and fine-tune AI capabilities; and get to the future first will reap significant benefits. Will you be among them?