QIS: AI Poised to Revolutionize Insurance Industry
PLEASANTON, Calif., Oct. 2, 2017 /PRNewswire-iReach/ -- According to a recent report from Accenture, three-quarters of surveyed insurance executives believe that artificial intelligence will transform the insurance industry within three years.1 "At the same time, a somewhat lower percentage of executives foresee significant changes in their own companies within that timeframe. This indicates that while the industry is aware of the changes AI will bring to businesses, we're still in the early stages of translating that awareness into a sense of urgency and a formal planning process," says Michael Macauley, CEO of Quadrant Information Services, a leading supplier of pricing analytics services to property and casualty insurance carriers.
Macauley expects urgency and planning to follow quickly as the potential benefits of AI become more apparent. As noted by customer relations futurist Blake Morgan, this fast-growing technology has the potential to disrupt the industry in a number of ways, one of which will be to greatly improve the insurance customer experience. The insurance industry, per Morgan, is notorious for its outdated processes, which make it harder for agents by increasing workloads and forcing them to work with antiquated systems and frustrated customers. For example, an individual claim currently passes through the hands of multiple employees. However, a new process, "touchless" claims, uses artificial intelligence and other technologies to report the claim, capture damage, audit the system, and communicate with the customer—all without human intervention.2
One early (and still prevalent) concern regarding artificial intelligence is that automating many internal processes could lead to widespread layoffs in the insurance industry. More recently, however, insurers have begun to see AI as a way to augment decisions made by claims and underwriting professionals, rather than as a means of replacing them with automated tools. It has been suggested that this pertains to the executive levels, as well, although executive positions are expected to change as a result of the technology. A spokesperson for PwC says that not only will tomorrow's leaders "refine their gut feelings and focus AI systems on some of their key hypotheses," they will also "hone their skill by playing against AI systems, just as we are seeing human Go players learn new tactics from the AlphaGo system that beat the Go world champion."3
Beyond improved customer relations and business processes, AI offers the promise of a significant reduction in fraudulent claims. Instead of relying on humans to manually comb through reports to ferret out inaccurate claims, AI algorithms can identify patterns in the data and recognize when something is fraudulent. This holds the potential for enormous savings across the industry; according to the Coalition Against Insurance Fraud, damages from fraud reach $80 billion across all lines of insurance. Forty percent of those losses occur in property-casualty insurance, and fraud comprises about 10% of property-casualty losses and loss adjustment expenses per year, for a total of about $32 billion.4
Macauley notes that all of these improvements—better processes, better market relations, better decision-making, reduced fraud—are coming to the industry, and coming very quickly. As supporting evidence, he points to the development of another burgeoning AI-supported activity, self-driving cars. When the U.S. Defense Advanced Research Projects Agency ran its 2004 Grand Challenge for automated vehicles, no car was able to complete the 150-mile challenge. In fact, the most successful entrant covered only 3.2 miles. The very next year, five vehicles completed the course. Now, every major car manufacturer plans to have a self-driving car on the road within the next five years.5
"This technology will make a huge difference to our industry," says Macauley. "And, with insurance being the tough, competitive business it is, the technology will make the most favorable difference to those who come to it early and well-prepared. A lot of the adoption process, particularly for larger firms, will involve folding AI techniques into a broader—and, in most cases, preexisting—data science and analytics group. All the experts I've read suggest taking a methodical approach. First, start by listing the key strategic decisions that affect the business, along with the related metrics that need improvement. Then, in application, think big but start small. AI's potential to influence decision-making is huge, but companies will need to build the right data, techniques, skills and decision-making procedures to exploit it."
About Quadrant Information Services:
Quadrant Information Services, headquartered in Pleasanton, CA, provides pricing analytics solutions for property and casualty insurance companies. Quadrant gives actuary, product development, pricing, sales and marketing personnel at its client companies—which include all the major insurance carriers in the United States—the data they need to make accurate, data-driven decisions. An industry innovator since its founding in 1991, Quadrant has provided the P&C insurance field with a long series of technological advances, including InsureWatch, the industry's first cloud-based pricing tool, which allows the user to produce unlimited combinations of reports with the click of a mouse. For more information, and to learn why Quadrant is for insurance companies that are tired of losing the right customers and winning the wrong ones, please visit http://www.quadinfo.com.
- "Technology for People: The era of the intelligent insurer," Accenture Consulting, 2017.
- Morgan, Blake, "How Artificial Intelligence Will Impact The Insurance Industry," Forbes, July 25, 2017.
- "AI Will Transform Insurance Industry, Execs Say: Accenture Report," Carrier Management, May 31, 2017.
- "By the numbers: fraud statistics," Coalition Against Insurance Fraud, 2017.
- "AI in Insurance: Hype or reality?", PwC, March, 2016.
Media Contact: Karla Jo Helms, JoTo PR, 888-202-4614, [email protected]
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SOURCE Quadrant Information Services
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