A succession of technical advances is propelling the insurance industry into a new era at a rate faster than can be understood, much less absorbed, in an orderly way. In a 2017 study by Accenture, 87% of responders agreed that the industry is no longer progressing in a linear manner; innovation is crashing into traditional business practices at an exponential rate of change.
While carriers, agents and risk managers are still trying to get their arms around concepts like blockchain (see Blockchain and Certificates of Insurance) bewildering new arrays of ideas and business methods are racing forward to further add disruption, opportunity and excitement into what used to be considered a "stodgy" industry.
Take AI, for example. Yes, it still means "additional insured," but that's not all. Ironically, those two letters are shared with another kind of AI – Artificial Intelligence. This AI seems to be the flavor of the century. The application of machine learning to a variety of insurance business practices and processes is getting underway. Early results are so successful there can be no doubt it is here to stay.
Why does it work? Because of one fundamental and profound fact – people are no longer adapting to technology; technology is adapting to people. The implications for this are legion, ranging from unimaginably told efficiencies, convenience and individual personalization of all human needs to doomsday scenarios where robots rule the world and humans are subjugated to their will. Whatever the ultimate outcome, we won't be around, so relax. In the meantime, let's consider what is going on in the world of risk management.
Because technology is becoming more interactive, we see opportunity to utilize touch displays, mixed reality and natural language conversation in areas as diverse as claims management, CSR, underwriting and new business sales and marketing.
Talked to any chatbots lately? Probably. They're getting so good you sometimes wonder if it's human or machine. They can now process and settle claims in a fraction of the time, leading to higher rates of customer satisfaction at significantly lower costs. Adoption is so rapid that by 2020 Gartner expects 85% of insurance customer service interactions to be handled by them. Both customers and industry employees will draw on chatbots for internal and external data assets to provide meaningful responses and conduct transactions.
Just as Amazon's Alexa has infiltrated homes and become another family member (well, sort of) giving us both information and entertainment, in the near future, people -- and ultimately businesses -- will buy insurance through voice interfaces.
Still have doubts? Experts predict the insurance industry will be the fourth largest consumer of AI by the end of the decade. On average, insurers will spend $90 million on AI solutions. These solutions will streamline processes, enhance the customer experience and improve productivity. Because AI embraces the notion of ongoing machine learning, both the user experience and the accuracy of decision-making is under continuous refinement.
Imagine the competitive advantages inherent in the arrangement of natural language processing and sentiment analysis capabilities: chatbots will correctly understand what the customer is saying in their own words. This, in turn, provides a deep opportunity for extracting strategic information from conversations. More Big Data leads to better data leads to better understanding leads to better decisions. Rinse and repeat. Infinitely.
Chatbots are just the beginning of the story, but enough said for today. One thing is certain, the next time you say "AI" it will likely cause you to think a little differently than what it used to mean.