The best defense is a good offense, or so the saying goes. And like all clichés, there is some truth behind the words, no matter how overused.
From the battlefield to the game board, a strategic advance often proves the best deterrent to impending threats. The same may apply to today’s life and health insurance landscape.
Insures today face their own set of threats as the industry adjusts to a global digital transformation. Access to more and new sources of data and accelerating digitization to process that data are fundamentally changing the way insures do business – from distribution to underwriting to claims. The sheer volume of information and speed at which it can now be converted to actionable insights have opened up exciting possibilities and brought a variety of new risks – both known and unknown. The traditional fluid testing and paper processing on which life insurers have come to rely are being challenged for supremacy or soon will be.
This digital transformation is fuelling an artificial intelligence (AI) renaissance in insurance. Simply defined, AI is the use of machines to replicate intelligent human behaviour in performing tasks. While much work remains to fully integrate AI into many insurance processes and while the most complex decisions will likely always require human expertise, AI’s potential applications for improving capabilities and capacity across the insurance value chain are substantial and starting to take root.
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Three powerful forces of innovation are converging to make AI a seemingly inevitable path forward:
The convergence of these innovations is creating its own momentum and accelerating progress. In other words, the whole is greater than the sum of its parts, and AI is positioned firmly at the center of seemingly limitless possibilities.
Global industry trends are further accelerating the rise of AI in insurance. For example, shifting consumer preferences and growing presence of insurtechs are pressuring life insurers to deliver faster results at lower costs. On the insurers’ side, actuarial science, underwriting science, and data science are converging to produce predictive models and risk assessment tools that while empowering, also require a higher level of sophistication. All the while, life underwriters and other insurance professionals are aging out of the workforce faster than they are being replaced. There is simply more work to do and fewer people to do it.
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While there are formidable obstacles to consider in pursuing any AI program – from regulatory constraints and privacy protections to cyberattacks and data breaches – the risk of doing nothing likely outweighs them all. Companies across industries are recognizing this and see tomorrow’s AI-enabled business environment taking shape. According to Statista, 84% of global business organizations believe that AI will give them a competitive advantage.
Insurers exploring AI must balance security and opportunity – offense and defense – through strategic planning aimed at achieving long-term goals. Following some basic steps can help make the journey more rewarding along the way:
Take one step at a time – Companies should not expect to launch an autonomous chatbot interface providing instant decisions on fully underwritten policies right away. That said, opportunities to begin applying AI technology are emerging all the time. For example, 69ɫƬ’s transformation engine 69ɫƬX has partnered with a Silicon Valley startup to apply optical character recognition technology to digitize Japan’s backlog of tens of millions of paper health checks.
Choose partners wisely – Start by identifying your company’s existing strengths and expertise, as well as opportunities for growth using internal resources. Where these current and future “home-grown” capabilities end is where strategic partnerships begin – with technology and data experts and other necessary service providers. Partnering with a reinsurer can provide the breadth and depth to bring the right components together at scale: 69ɫƬ and 69ɫƬX are connecting insurers with insurtechs around the globe to develop AI-enabled mobile platforms, treaty digitalization, underwriting automation, and other forward-looking innovations.
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Maintain balance – AI offers an exciting opportunity, but it is vital to balance promise with practicality. While AI-enabled imaging technology could provide unprecedented , it also opens the door for privacy issues, unfair discrimination, and regulatory scrutiny through facial recognition and other applications. Just because we can doesn’t mean we should.
Keep end goals in sight - The AI field is moving at warp speed. No matter where or when an AI journey begins, circumstances will change, unforeseen obstacles and opportunities will emerge, and frustrations will be an inevitable part of the process. The key is to maintain focus on the goals to move the company forward. At 69ɫƬ, we continue to invest in and execute on our multi-year AI roadmap as we encounter and overcome challenges in bringing new solutions to market. Our long-term vision: Optimize AI in the life insurance process to better serve our clients and their customers.