A look at today’s insurtech constellation reveals several established, “sparkly”
technologies. Among the most visible
stars are advanced analytics, robotic process automation, robo advisors, wearables, connected ecosystems, and drones,
which all point to a bold, bright future.
And promising to go supernova soon
enough are blockchain and AI.
One of the overarching goals of insurtech is to enhance straight-through
processing (STP), allowing information
that has been electronically entered to
be transferred from one party to another in the settlement process without
manually re-entering the same pieces of
information repeatedly over the entire
sequence of events. The goal of
STP is simple – reducing the time
it takes to process a transaction
to increase the likelihood that a
contract or an agreement is settled
on time. To that end, a number of
technologies come into play:
Advanced analytics enables
insurers to make better decisions
by taking advantage of tools to
manage vast pools of structured
and unstructured data filled by information flow from an exploding
array of sensors and connected devices.
For example, Intact’s pay-how-you-drive
auto insurance collects 20 data points
per second from around 300,000 users
across Canada. No human or team of
humans could run a predictive model
based on that volume of data. Advanced
analytic tools make it possible to put
that data to productive use.
AI’s strength, and in one sense what
distinguishes it from mere automation,
is its ability to convert that seemingly
random data into structured outputs to
achieve specific outcomes, such as facilitating more effective advanced analytics.
AI techniques are forward-looking. Given
the historical and current data, what can
we uncover in the data? What can we predict for future developments? What can
we optimize? What can be automated?
In that sense, artificial intelligence is the
logical next step after big data.
Another star, robotic process automation, eliminates the need for human
participation in repetitive, labour-intensive tasks that don’t require much
decision-making. Tasks such as data-entry, compliance-tracking, and property-assessment all lend themselves to RPA.
On the client-facing side, using
pre-defined algorithms, robo advisors
can handle a wide range of customer
interactions related to advice, including
policy renewals, query resolutions, and
Another rapidly growing trend – the
use of wearables – drives real-time
health data to insurers, who can better
model health risks to create personal-
ized pricing, speed claims processing,
react quickly to health events, and foster
healthy behaviour among customers.
When it comes to P&C, sensor-based
connected ecosytems monitor clients’
home environments, and enable insurers to segment customers according to
their safety standards, and offer personalized pricing, reduce incident frequency, and accelerate claims processing.
Drones provide digital imagery that
can speed property assessments during
underwriting and claims processing,
especially in cases such as fire or natural
disaster where properties may be difficult to assess.
All of these established technologies
can be turbo-charged with the application of blockchain and self-learning
systems that can structure massive data
flows comprised of a multitude of apparently unrelated factors and produce data
output that can be used effectively in automated tasks, or to better-inform human
decision-making, and to learn over time –
in other words, artificial intelligence.
According to Andy Hopkins, head of
strategy and architecture at QBE Insurance Group Limited, Australia’s largest
global insurer, “Blockchain has the potential to kill the market and will create
a radical shift in the industry. This will
be especially powerful when coupled
What industry analysts are
saying about AI
In survey data published by Capgemini
in its World Insurance Report 2017,
insurance executives rank AI as the third
most important emerging technology,
behind advanced analytics and connected devices.
Elsewhere, Tata Consultancy Services’ Global Trend Study on Artificial
Intelligence1 compiled survey responses
from 835 executives across 13 industries
worldwide. Researchers behind Getting
Smarter by the Sector: How 13 Industries Use Artificial Intelligence found
that AI is becoming essential to remain
competitive. All of the industries polled
revealed plans to advance AI initiatives
within the next three years.
A full 75% of 550 insurance executives
recently surveyed by Accenture said
they believe that AI will either significantly alter, or completely transform, the
overall insurance industry in the next
Tata points out that AI is already
delivering meaningful business benefits
to the insurance industry. The
majority of insurance provid-
ers – 85% – currently use AI; the
remaining 15% plan to do so by
The insurance industry is
outspending all 12 other verticals
Tata surveyed by a significant
amount, having invested on
average $124 million on artificial
intelligence systems in 2015, compared to a cross-industry average
of $70 million.
According to the report, insurance
companies said they were most likely to
invest in AI solutions for the IT function
(59% could be doing so). However, they
are applying AI in a wide range of functions, including customer service (46%),
finance and accounting (33%), marketing (30%), sales (28%), strategic planning and corporate development (24%),
and human resources (20%).
What (and who) AI will change
or render obsolete
Looking ahead, insurance companies
anticipate that an average 14% of jobs on
average could be cut by 2020 in functions using AI, and 18% of jobs could be
automated by 2025 through AI in functions that use the technology.
However, that projected job loss looks
to be mitigated by some of the new roles
these AI-related systems will create. Insurance industry respondents predicted
that AI could result in an average jobs
increase of 10% more jobs in those functions by 2020, and 15% more by 2025.
Respondents predicted that the majority
of these new jobs will be filled in-house
by existing employees.
In Canada, Intact Insurance contin-
ues to take an aggressive stance toward
developing and deploying artificial
Continued on page 43 >
A full 75% of insurance
executives said they believe
that AI will either significantly
alter, or completely transform,
the overall insurance industry
in the next three years.