Artificial intelligence (AI) is set to revolutionize the insurance industry and it is coming to every carrier, agency and policyholder. AI, at its most basic understanding, is the mimicking of human behavior:
This definition is simple enough to understand. Where things really take of is when the complexity within these elemental skills increases or in multiple combinations of the elements where we begin to understand how AI’s application can be something that jumps out of the lab and into live applications to solve real-world problems. Up until recently artificial intelligence and its children, machine learning, natural language processing and cognitive computer have been more science fiction that day-to-day life. It has lived mostly in research labs since the 40’s. Now it has come to practical applications in the workplace.
It is the process of sensing and collecting data. Self-driving cars and the people in them are going to have dozens of sensing devices–GPS, gyroscopes, accelerometers, speedometers and auto on-board diagnostic sensors, and environmental sensors. And analysis? All of this sensing data plus the piles of databases like weather, historical and demographic data, put through the ringer to develop and recognize patterns in that data that match known behaviors and risks.
The competitive landscape has gotten hotter with all of the new technologies giving one company an edge on its adversaries. This most recent wave of innovation is putting the customer squarely in the center. And policyholders, especially younger, technology-adept customers, are embracing the changes.
The most obvious examples of artificial intelligence in insurance is the rapid spread of smart automation in customer communications. These AI virtual agents for insurance take care of some of the most frequent, routine customer service calls. But less known are the ways artificial intelligence is being introduced to the insurance organization. Many applications are available or in the works already:
These smart systems are quickly developing the ability to detect event the subtlest signs of fraud, help design new insurance products, perform advanced modeling of risk, and assist with optimizing pricing strategies. Pairing these skills with the increase in the amount of data collected from wearable devices and sensors in our phones, homes and cars, the insurance industry can look forward to having access to insights into their business and their insureds unrivaled with our current tools. And this data will be arriving moments after events occur, not weeks or months later.
The coming changes that artificial intelligence will bring seems daunting. Insurers should begin with getting teams accustomed to the idea of AI tools being part of every area of the business. Included in the discussions should be reassurance that these technologies are arriving to help the organization and its members, not replace them. Along with these conversations, provide your departments with appropriate education about what artificial intelligence is and is not.
On the heels of the culture shift, insurers need to organize groups in all areas to work on their innovation strategies that put artificial intelligence solutions as priority tools to consider. In tandem, leadership must steer the vision for artificial intelligence adoption, coordinate efforts and set priorities for projects. As the company moves forward with projects, human resources will need to help out with getting current staff trained on the new tools and processes, and with adding new team members as business increases.
Company-wide changeover to an artificial intelligence focus will present many challenges but insurers, from agencies to carriers have demonstrated in the past that their adaptability and pragmatism ensures they will emerge stronger and more successful than before.
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