How Artificial Intelligence is Reshaping the P&C Insurance Industry

By: Catherine Smola, President & CEO, CSIO | April 2019

Your smartphone’s alarm marks the start to a new day. You ask your Alexa smart speaker to play a list of music suggested for you and glance at your Fitbit data from yesterday. While the coffee’s brewing you scan the news – curated for you, on your smartphone. You settle into your favourite chair to quickly answer a few emails and schedule appointments using your Google Assistant app.

Before you’ve left for work, you’ve used Artificial Intelligence (AI) 10 or more times.

It’s no surprise that consumers today expect insurance to offer the customization and ease that AI brings to so many other interactions.

And the demand is only growing as technology will continue to change drastically in the next decade. By 2020 over 20.4 billion “things” will be “connected”. A recent McKinsey report predicts that by 2025, buildings constructed with 3D-printed components could become reality. By 2030, 25% of cars on the road may be self-driving. Within a decade, we could be using autonomous farming equipment and enhanced surgical robots.

AI will Transform Insurance

According to McKinsey, AI will take insurance from a current state of “detect and repair” to “predict and prevent”, transforming every aspect of the industry in the process. “It will shift risk pools, change customer expectations, enable new products and channels”.

This AI Revolution is Already Underway

In fact, insurance companies are already using AI. While it’s generally been back office usage, it’s quickly moving to the forefront of experiences according to Accenture. Insurers are using drones and apps to assess damage and streamline claims. They are relying less on tables and trends and assessing real risk using telematics to tie actual driving habits to risk – and then to rates. Interactions are changing, thanks to chatbots that assist customers and digital coaches that walk brokers through new products.

Endless Data Means Unlimited Personalized Experiences

All of these connections create a wealth of data about each of us. While there’s far too much data for humans to make sense of, it’s just what AI needs to “get to know” each of us and create a profile of our health, habits, and preferences.

There are many advantages for brokers:

  • You’ll have data that allows you to know your clients – and even your prospects – and really understand their needs, even if you only see them periodically.
  • You’ll spend more time on building relationships and less time on paperwork and prospecting that can be automated effectively with AI.
  • Your customers’ experience will be enhanced through AI that efficiently takes care of routine customer service tasks.

Consumer benefits include:

  • Truly personalized products, with pricing based on how safe or risky each person’s behavior is, rather than general aggregated data.
  • Telematics and other connected devices will provide the data to recommend the right product bundle, at the right cost. And it will adjust as their lives change.
  • Claims that are less time-consuming and more convenient.

A smartphone app can send pictures of damage to a vehicle, for instance. Rather than a manual, in-person inspection, AI will inspect and pay out a claim. And AI will keep track of all claims data, making it faster and easier to spot anomalies.

What Does it Mean for the Insurance Industry

Companies like Element AI, a CSIO member, are rapidly bringing AI to insurance solutions. Charles Dugas, Head of Insurance of Element AI was the keynote speaker at CSIO’s 2019 Members’ Meeting on April 16. In his presentation “AI: Setting the Stage for Systems of Intelligence,” he described the ways that insurance leaders should educate themselves on AI’s possibilities, in order to manage expectations. Recently named one of the fastest growing Canadian tech companies, Element AI was founded in 2016 by entrepreneur Jean-François Gagné and world-renowned deep learning pioneer Yoshua Bengio. Its vision is to partner with academic and business communities to turn collaborative research into products that solve real world problems.

Technology is only part of the solution. Working together is going to be the key to adopting AI in insurance. The exponential increase in data across devices and platforms is going to make data standards and coordinated projects ever more important for anybody with a role in this industry.

Clearly the pace of change, personalization, product categories and pricing are all going to increase rapidly. Relationships will change, but with the added bonus of depth and knowledge in our interactions. The ability to analyze the influx of data will bring the benefits of AI to consumers, brokers and carriers sooner rather than later.