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What’s The State Of AI In Insurance? 12 Experts Share Their Insights

  • 20 September 2019
  • Sam Mire

Can you think of any three companies more advertised for on television than GEICO, Allstate, and State Farm? They all claim to be saving their customers money with high-tech gadgets aimed at delivering fairer premiums. But these are ads, so what's the real story behind the insurance industry's relationship with the latest technologies, AI included?

The industry professionals shared their insights about the state of artificial intelligence in the insurance industry. Here's what they said:

1. Ryan McMahon, Vice President of Insurance at Cambridge Mobile Telematics 

“We are in the early days of AI-applied technology in the insurance industry. The most prevalent usage is within telematics, with the ability to combine mobile sensing with machine learning to understand and improve driving behavior. In addition, insurers are starting to use a variety of technologies, including Robot Process Automation for low-level tasks, and more advanced forms of machine learning for more complex challenges.”


2. Chad Hawkinson, Senior Vice President, Data & Analytics at Vertafore

“Like most industries, the hype and excitement around the opportunities to leverage AI are increasingly common. Also like most industries, real adoptions of AI are slowly starting to trickle into the marketplace. On the insurance carrier side, we are seeing insurance companies embrace AI applications around:

  • Claims processing, e.g., disability claimants who post pictures of their ski vacations on Facebook.
  • Creating alternative risk analytics that enable more nuanced views of risk than offered by standard actuarial tables.
  • Leveraging imagery and drones to inspect properties rather than sending people to inspect before writing claims.
  • Using machine learning to reduce the application time necessary to develop an insurance policy quote by pulling in other data sources to confirm data rather than requiring clients to manually enter (e.g., hazard information from third party data sources).
  • Marketing, specifically with the use of increasingly sophisticated chat bots to engage with customers during sales, follow-up communications or claims processing. We are also seeing the larger insurance agencies embracing AI by using marketing chatbots for automating policy to ensure the policy written actually addresses the needs and saves significant time by automatically creating customer-facing proposals or RFP responses. ”

3. Amir Cohen, co-founder and CTO of Planck

“Artificial intelligence is a code name for many different computive implementations. However, AI has started becoming a massive part of the internal discussions of insurance executives as they continuously seek opportunities to improve profitability and reduce expenses.

Carriers have already started adapting AI at its simpler mode of robotic processing automation to replace repetitive tasks. This was done manually, either with traditional processes or due to the presence of multiple IT systems that could not directly sync with each other. Obviously, AI is also being used for building better prediction models.”


4. Christian Wiens, CEO of Getsafe

Over the last two decades, technology has dramatically changed the way people interact with products and services. This trend towards services that are available on-demand in real time is now also gaining in importance in the insurance industry. Insurance companies need to change. However, AI in insurance is still in its infancy in many areas. What most insurers lack to enable them to fully exploit this potential is data. Almost all providers are still battling with countless data silos and are not able to bundle customer data over the entire customer lifetime.”


5. Tanguy Touffut, co-founder and CEO of Descartes Underwriting

AI can revolutionize the insurance industry on two parameters: Product & Pricing and Claims. Currently, we are seeing that more and more insurers are tapping into claim automation, e.g., decreasing end-to-end processing times of policies through fraud-detection algorithms and other AI-powered technologies. However, on the product and pricing side, the industry is still at the beginning of a long journey.

Designing insurance products is complex since evaluating risks and losses is not a straight-forward undertaking in most cases. Therefore, AI has only been used to a limited extent for product innovation. Everest Global investigated the areas in which insurers are focusing on AI implementation and confirms that in 2018, only 19% focused on product innovation, whereas AI was more common in process optimization (43%) and customer experience (58%).”


6. Jeremy Jawish, CEO & co-founder of Shift Technology

It’s an interesting time for AI and the insurance industry. We’re quickly approaching that inflection point where carriers have a better understanding of how AI can impact various aspects of their business and want to do something about it. Insurers are actively evaluating where the greatest impact will be and putting strategies into action to drive business value.

At the same time, we must understand that applying AI to the various challenges facing the insurance industry is still a fairly new idea. There’s tremendous interest in digital transformation and modernization. Carriers want to shake off the idea that they’re too traditional, too set in their ways, too slow, to make meaningful changes in the way they do business. That means they’re open to new ideas and new ways of thinking. For example, how many insurance companies had a Chief Innovation Officer or a Head of Digital Transformation even just five years ago. And while those titles are not ubiquitous – yet – I believe they soon will be. We’re definitely at that point where AI is becoming less and less experimental and more a strategic approach to creating new business opportunities.”


7. Scott McConnell, President of Insurance for NTT DATA Services

Current uses of AI include:

– Voice recognition – This is currently one of the most common forms of AI. When you contact customer service, insurers can use AI to validate your identity and gather basic information prior to being connected to a representative. This frees up time for the employee to complete other tasks. Insurance is fairly mature in using voice recognition but still lags a bit behind banks and investment companies.

– Image recognition – This is an area of tremendous promise, especially on the property & casualty side of insurance. When AI is used for image recognition, it can help determine what is happening by analyzing a photo. For example, when drones capture images of an area impacted by a weather event, AI can help deliver preliminary estimates on roof damage and have the repair process started faster, rather than having an adjuster visit each site individually and inspect for damage.

– Machine learning – Machine learning is most often used in underwriting and claims processes where AI technology can help carriers make better decisions. Machine learning can analyze data relative to other cases and provide scores to claims adjusters to determine if there is a potentially fraudulent claim. As the AI function has more data available, the more effective it becomes.”


8. Michael Stahl, Executive Vice President and Chief Marketing Officer at HealthMarkets

“There are a number of ways AI has already impacted the insurance industry, and it will certainly continue to have an impact. Consumers want information at the ready, so as a provider of health insurance, we have adapted our business to accommodate that desire for real-time information – when, where and how they want the information. There are various tools that have been implemented with the help of AI to allow consumers to seek out this information on their own, but there is always the opportunity to connect with a human being – be it a customer care representative of one of our thousands of agents throughout the country – if that is what the user wants.”


9. Dan Peate, CEO and Founder of Avinew

“People in the insurance industry are starting to think about how they can process data with AI, but full adoption and ubiquity of AI is definitely a ways away. The insurance industry is starting to realize the huge impact that AI could have on the underwriting process and how it has the potential to change risk dynamics for carriers. There are applications that include AI and insurance companies are testing these, but it’s not moving fast enough.”


10. Saty Mahajan, co-founder & CTO of Bento

“AI is starting to make inroads across the entire insurance industry. However, we are at the beginning. At this stage, there are tools and certain processes that are augmented with AI, but we haven’t seen AI added holistically across all the key areas yet. The holistic approach is coming with new companies who are starting from the beginning with AI as a core technology, like Bento.”

 


11. Ji Li, Director of Data Science at CLARA analytics

“AI is disrupting and improving businesses across all industries, including insurance. The commercial insurance industry is in an early and exciting stage of implementing artificial intelligence. Over the past several years, AI technology has progressed immensely and continues to develop and improve all the time. It has become increasingly proficient at performing tasks traditionally difficult for computers to perform, including recognizing images, spoken words, and using unstructured data. With widespread acceptance, AI is poised to provide a large source of value and be a key driver of competitive advantage going forward.

In addition, AI is evolving to exhibit the “brains” we need to improve profitability in insurance. It is important for executives to realize that AI is fundamentally very different from the typical business intelligence approaches of the past. The BI infrastructure (i.e., data warehouses, reports) that most organizations have is a great start, but it does not have the agility and self-learning capabilities offered in the new wave of AI-based solutions. The insurance industry is ripe for transformation in areas such as customer service, MSAs, claims, litigation, medical providers, and fraud detection.”


12. Ryohei Fujimaki, Ph.D., Founder & CEO of dotData

“As insurers strive to become more relevant to their customers and more efficient, they have embraced the strategic importance of their data. But while they have been collecting increasingly large stockpiles of consumer data, until recently they have lacked the tools and talent to operationalize it – particularly with the level of transparency required by regulatory bodies. This has led to challenges in operational efficiency and customer relationship management.

Now, advances in AI and particularly, data science automation enable insurers to improve the customer experience, boost retention while also increasing efficiency.”


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About Sam Mire

Sam is a Market Research Analyst at Disruptor Daily. He's a trained journalist with experience in the field of disruptive technology. He’s versed in the impact that blockchain technology is having on industries of today, from healthcare to cannabis. He’s written extensively on the individuals and companies shaping the future of tech, working directly with many of them to advance their vision. Sam is known for writing work that brings value to industry professionals and the generally curious – as well as an occasional smile to the face.

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