New SMA Blog by Mark Breading, Partner, Strategy Meets Action —
Technologies in the artificial intelligence family have great potential in insurance, according to a recent SMA survey of P&C insurance executives.* This should come as no surprise to anyone following the developments in machine learning, natural language processing, computer visioning, chatbots, virtual assistants, and other related technologies. After a long and varied history of AI technologies (including the lengthy AI winter), we are now on the verge of the golden age of AI. At least that’s the storyline most have bought into. But in the context of the insurance industry, is the potential of AI overhyped? Or, despite all the enthusiasm, is the ultimate impact even underestimated?
To answer those questions, it is necessary to further examine the technologies and their possible uses. There is not one easy way to express the potential of AI for P&C. And much of the actualization depends on the time frame. It is important to recognize the many different technologies that comprise the AI family. Insurers see the highest potential in machine learning, robotic process automation (RPA), and technologies to analyze unstructured data (natural language processing, data mining). RPA implementations, in particular, are taking off like rockets in the industry. Insurers of all sizes are already leveraging the technology to automate routine tasks. Many projects are also underway using machine learning to assess risk and identify fraud (among other things). So, value is already being delivered, and insurers are moving forward with AI-related projects for specific technologies.
Several factors are driving the interest and activity in AI. First, insurance is a process and data-intensive industry. Massive amounts of both structured and unstructured data are captured, routed, organized, and analyzed. The industry has just scratched the surface on the traditional data, and new data sourced from sensors and connected devices is added to that. The possibilities to automate for efficiency and analyze for insight are tremendous. Second, insurance is a people-intensive industry. For most lines, experts are required to sell insurance, assess risk, handle claims, and manage operations. Many of the seasoned experts in various disciplines are expected to retire over the next 5-10 years. This creates a compelling need to automate low-level tasks and augment human expertise for more complex tasks so that the potentially smaller and less experienced workforce can continue to propel the industry forward.
Yes, there is a lot of hype about how AI will transform the industry. It is also true that much of the potential transformation may still be a few years away as the power of AI technologies slowly ripples across the industry. But the convergence of industry factors, the rapid progress of the technologies, and the experience gained by other industries in their AI deployments mean that AI is likely to have a transformative impact on insurance over time. So, it’s safe to assume that the potential of AI technologies is overhyped for the near term but underestimated for the long term.
* See SMA’s new research report, AI Technologies in P&C: Insurer Progress, Plans, and Potential, for more details and insights.
About The Author
Mark Breading, a Partner at Strategy Meets Action, is known for his insights on the future of the insurance industry and innovative uses of technology. Mark consults with insurers and technology companies on forward thinking strategies for success in the digital age. His inventive methods and his ability to incorporate InsurTech and emerging tech into business strategies are unparalleled. Mark also leads SMA’s research program, has overseen the publication of over one hundred research reports, and directed custom research projects for insurer and tech clients. His thought leadership in the areas of InsurTech, emerging technologies, customer experience, and digital strategies has earned him rankings as a “Top Global Influencers in InsurTech” by InsurTech News and Onalytica and a place in the 10 finalists for the “Top Global IoT in Insurance Influencer Award.”
Before joining SMA in 2009, Mark spent 25 years with IBM, where he co-developed IBM’s Account Based Marketing program and led the global project office to implement ABM across all industry verticals worldwide. Mark has held both technical and business roles in sales, consulting, marketing, and business strategy and has advised insurers around the world for almost 30 years.
He is a frequent speaker at industry events; an InsurTech mentor with the Global Insurance Accelerator; and a frequent contributor of articles to Insurance Thought Leadership, Insurance Networking News, LOMA Resource, and many other industry publications.
Exclusively serving the insurance industry, Strategy Meets Action (SMA) is an advisory services firm offering retainers, research, consulting, events, and innovation offerings to both insurance companies and solution providers. Learn more about SMA at www.strategymeetsaction.com.
SOURCE: Strategy Meets Action (SMA)