Property and Casualty (P&C) as a whole is moving forward with new technology. In particular, Blockchain and Artificial Intelligence will be seen as concrete tools that satisfy what really matters: making money, saving money and delivering a superior customer experience.
The landscape of 2019 is promising . Moving from hypothetical what-ifs to practical use cases, and from the misconception of technology as a replacement for humans, we can focus on leveraging tools such as AI, Blockchain, and Data Science to enhance our delivery. Empowering these innovations, insurance can also expect to see a new focus on the development and maturation of firms in the start-up space.
However, there will be uncertainties and untapped potential. We as an industry still struggle with formalized client engagement strategy and edgy applications like chatbots.
So what to watch in insurance in 2019?
Blockchain has struggled because too many people want to create it, rather than adopt it. The adoption of blockchain cannot and will not be driven by any single entity. It’ll be driven by the collective understanding of the industry and that critical mass depends on a variety of partners connected to an industry-defined set of blockchain instances. Blockchain will begin to make an impact when the industry needs define parameters and best practices (e.g., RiskBlock Alliance). Without an accepted standard, it will be a mess. Once solved, we’ll see real breakthroughs with blockchain as everyone thereafter simply has to plug in.
The Evolution of Data Science
Data science is no mystery to insurance. We love our SAS models. Data Science must now move to the forefront, as exploratory work gives way to innovative methods that empower our industry as a whole. Insurance experts continue to educate themselves, both formally and informally, about data science.
The uses for data science are already well-documented but require some repeating: AI/ML (Artificial Intelligence and Machine Learning), Fraud Detection, Underwriting Insights, Catastrophe Modeling, and Customer Insights. Since AI and ML are the foundation of the progress we hope to see in 2019, data science must lead the way.
Artificial Intelligence, but not just in the back room
AI is not going to replace humans at least not in the foreseeable future. It’s not magic, nor is it a crystal ball. Successful companies will see how this technology can help humans, not replace them.
For claims, AI will add additional scope by aiding First Notice Of Loss (FNOL), adding advanced natural language understanding to automate most if not all of the manual entry (and re-entry) around it. Automation and data will more thoroughly and accurately predict fraud, and reserving will see critical mass.
Additionally, Computer Vision made significant progress in 2018. This is a technology that allows computers to interpret images. Advancements will continue in 2019, but with greater emphasis on adoption versus proof points. The insurance industry wants to adopt AI/ML, and computer vision is no exception. Whether it be drones providing a high-level view of catastrophe (CAT) losses, or mobile devices aiding adjusting, these ideas are now taking center stage and proving value to the industry.
In underwriting, we will see more augmentation like Machine Learning (A subset of classic AI) that provide just-in-time intelligence to Underwriting. This can enable some level of streamlined processing for lower-risk lines of business such as Renters. We will also see data insights used more prevalently with uses beyond marketing, with Fraud profiling during underwriting being a quick win.
Some of this is already in place. More companies, both big and small, will jump in now that the science fiction has given way to reality; And more importantly, measurability.
The technology can help humans input information more quickly and accurately, provide insight, and assist in recognizing problems. This is augmentation, not replacement. The age of the machines helping humans effectively has begun.
Stop Starting, Start Delivering
Assuming the industry is ready for adoption, it’s logical to conclude that start-ups will stop “starting” and instead move into growth mode, headlong towards maturity. This implies a few will thrive, many will cease, quite a number will merge, and others will be acquired by insurance companies, larger technology companies, or larger financial services firms.
A Bridge too far….
We are a conservative industry. Here are a few things I suspect we will not have the courage to embrace yet….
Firms are missing out on the incredible potential of chatbots because insurance still sees them in the context of customer communication. Chatbot technology is a pigeon-holed technology, but not a strategic part of the future. If chatbots are combined with ambient computing, they can change the entire way we interact with systems and each other. This can start with employees, agents, and brokers, not customers. Gone is the situation where your agents are typing frantically while simultaneously trying to maintain a meaningful conversation with the customer; A chatbot can direct the right information at the right time. This is the opportunity we miss because ‘chatbots are for website chats only’.
Related to chatbots, the industry will likely also fall short in improving the client experience. Innovative methods like Customer Journey Mapping and Design Thinking are fundamentally based around technology. “The business must run the business!” We end up selecting our data after picking our hypothesis; It just doesn’t work that way. We ourselves make it difficult to learn, try and advance customer experience methods. We continue to miss the boat on transformative customer experiences and will likely continue.
If not now, when?
We as an industry resist dynamic change. If we fail to engage these technologies, insurance will retreat almost entirely to the old ways of doing things. The industry is only tempted with edgy technology for so long and without tangible business value, we will abandon them. If we continue to constructively evaluate our current progress with actionable and tangible goals with implementation strategies, then we can unlock the potential of the technology that once seemed like fantasy.