Three-quarters of insurance executives believe that artificial intelligence will transform the overall industry within three years, although a slightly lower percentage foresee significant changes occurring at their own companies in that timeframe, Accenture reported recently.
According to the professional services company’s “Technology Vision for Insurance 2017” report, insurers face challenges integrating AI into their existing technology, with issues such as data quality, privacy and infrastructure compatibility representing some of the roadblocks.
The annual report carrying the subtitle “Technology for People: The Era of the Intelligent Insurer” is based on the insights of a technology advisory board, interviews with industry technologists and a survey of more than 550 insurance executives across 31 countries.
According to a summary released in April:
- Seventy-five percent of the surveyed executives believe AI will either “significantly alter” or “completely transform” the overall insurance industry in the next three years.
- Less than one-third (32 percent) believe that their own companies will be “completely transformed” by AI within that timeframe.
- Another 39 percent believe that AI will “significantly change” their companies.
Together, the last two responses add up to 71 percent of respondents, and Accenture reports that insurers are investing in AI in several areas of the business, including distribution, claims and underwriting. They are looking to empower agents, brokers and employees to enhance the customer experience with automated personalized services, faster claims handling and individual risk-based underwriting processes, Accenture said in a statement.
Separately, Carrier Management interviewed representatives of four global insurance groups—XL Catlin, Allianz, QBE and Zurich—who described some of the AI initiatives already underway at their firms. They range from condensing lengthy engineering reports for swifter underwriting, reassigning some of the claims administrative services handled by offshore humans to robots, interpreting crop risk information delivered by drones, and deciphering communications from customers with heavy accents using natural language processing. Also detailed is Zurich’s use of a multilingual natural language processing product called Cogito from Expert Systems that mines complicated, voluminous claims data to rapidly provide more refined information to claims adjusters for faster decision-making.
(The full article, “Cognitive Computing Takes Off,” is published in Carrier Management’s second-quarter print magazine. The article will be published online for Carrier Management members on June 20.
In early January, Carrier Management gave a high-level preview of Zurich’s use of AI for handling personal claims. See related article, “AI and Insurance: Are Claims Jobs in Danger?)
P/C insurers interviewed by Carrier Management see cognitive computing as a way to augment the decisions of claims and underwriting professionals rather than as a means of replacing them with automated tools. But consultants are still counseling industry professionals to prepare for changes ahead.
In an article that he wrote for Carrier Management, PwC’s Anand Rao says, “The future of the insurance workforce is…man and machine.” With AI augmenting their decisions, Rao believes future insurance professionals will interact with AI—some using their industry knowledge to teach the AI, and others using technical expertise to build better AI. Even executives will see their jobs change as AI tools are adopted, he suggests. Not only will they use “management cockpits to refine their gut feelings and focus AI systems on some of their key hypotheses,” but tomorrow’s leaders will also “hone their skills by playing against AI systems, just as we are seeing human Go players now learning new tactics from the AlphaGo AI system that beat the Go world champion,” according to Rao.
(Carrier Management members can preview Rao’s article, “Man and Machine: The Future of Insurance Work and Workforce,” here.)
In her article, “Rethinking Insurance Work: How Claims Processing, Agent Jobs Will Change,” Tracey Malcolm of Willis Towers Watson describes a new metric for examining the value of improved work performance with automation, helping carriers to pinpoint activities where AI can play a role. Focusing on the sales function, she writes: “For human agents, part of their work may be replaced by…cognitive automation and robo-adviser[s]; simply put, clients will more directly access insurance information and support, and carriers will provide these channel options.” (Malcolm’s article, also published in Carrier Management‘s second-quarter print magazine, will be published online for Carrier Management members on June 22.)
Back at Accenture, John Cusano, senior managing director and global head of the Accenture Insurance practice, said, “The adoption of artificial intelligence is gaining momentum within insurance, with executives pointing to AI’s potential to revolutionize the customer experience and empower agents, brokers and employees,” summarizing the “Technology Vision for Insurance 2017” report in a media statement.
In a related April 19 blog item, Cusano paints a vivid picture of how customer exchanges will become increasingly personalized as insurers make further AI investments—moving beyond initial forays of intelligent automation in the back office to virtual assistants on the customer front lines. “We envisage a world where complex graphical interfaces one day disappear and the technology becomes invisible. Customers will no longer need to understand complicated technology to use it: they can simply talk to, gesture at, or touch the AI that controls it. This sort of seamless interface will enable us all to be more productive and efficient; it will also spur more use of technology.”
Like Malcolm, Cusano notes that client advice (especially for life products) will be offered as a combination of algorithm-based automation and person-to-person interaction. “Customers will base their opinion and interest in a company on the AI, just as they judge by their experiences with human employees,” he believes.
In a statement about the Technology Vision report, Accenture noted that 79 percent of the executives surveyed believe that AI will revolutionize the way insurers gain information from and interact with their customers. In addition, more than two-thirds (68 percent) of respondents said they now use AI-powered intelligent virtual assistants either across the organization or in specific business areas to create better customer interactions.
“While insurers are increasingly aware that AI is central to their success in the digital economy, their success is by no means assured,” Cusano said. “As the technology evolves, insurers will need to not only address data quality and privacy concerns but also revamp their IT architectures to support AI’s features and technical dependencies.
“Insurers that focus on empowering people with a human-AI experience and intelligently integrating AI into their company will benefit from a powerful combination that drives deeper customer engagement, stronger brand loyalty and more sustainable profits,” he said.
Walking the Talk
Like insurers, Accenture itself has embraced automation to replace processing roles—17,000 of them, according to an April 5 LinkedIn post published by Richard Lumb, group chief executive of Financial Services at Accenture. “But we haven’t laid those people off. Instead, we’ve reskilled them to work in other areas. And typically their new roles are more interesting than before,” the LinkedIn article says.
Lumb actually first shared this news during a widely referenced interview with Business Insider in mid-January at the World Economic Forum.
According to the Business Insider report, Accenture, one of the largest professional services companies in the world, had nearly 400,000 employees in 2016 with clients from 200 cities across 120 countries worldwide. And Lumb told the interviewer there were roughly 100,000 people involved in back-office processing impacted by the automation initiative. By automating 17,000 “boring and repetitive” tasks, Accenture boosted productivity, he said in the Business Insider piece.
That article was published just a few weeks after a Japanese life insurer, Fukoku Mutual Life Insurance, revealed that a new cognitive computing system would displace 30 percent of its claims workforce, pushing tweeters and bloggers into high gear with dire warnings about job losses in the industry.
The big difference at Accenture: No one lost their job, according to Lumb, who told Business Insider that the company even provided 72,000 staff with new IT training to reskill workers in a fast-changing technological environment.
A more recent March 23, 2017 article in the MIT Sloan Review by Accenture’s H. James Wilson, Paul R. Daugherty and Nicola Morini-Bianzino describes three categories of new human jobs that will be created as automation displaces some existing ones in various industries:
- “Trainers” of AI systems.
- “Explainers” that bridge gaps “between technologists and business leaders.”
- “Sustainers,” keeping AI systems ethically in line and addressing any unintended consequences.
In the article titled “Will AI Create as Many Jobs as It Eliminates,” the authors suggest that humans in these roles will “ensure that the work of machines is both effective and responsible—that it is fair, transparent and auditable,” basing their conclusions on Accenture’s global study of more than 1,000 large companies already using or testing AI and machine-learning systems.
“Customer service chatbots…need to be trained to detect the complexities and subtleties of human communication,” the authors wrote, giving one example of a human trainer role, going on later to describe the need for “empathy trainers” to ensure that Alexa doesn’t give canned, insensitive responses to anxious customers.
Beyond AI: The Rest of Accenture’s Technology Vision
AI is one of five key trends shaping the insurance industry that Accenture identified in the “Technology Vision for Insurance 2017” report. Other report themes include:
• Ecosystem Power Plays. Insurers increasingly integrating their core business functionalities with third parties and their platforms.
Seventy-six percent of insurers believe that their organization’s competitive advantage will be influenced by the strength of the partners and the ecosystems they choose.
• On-demand labor platforms or open talent marketplaces fueling rapid innovation and organizational changes that companies need to pursue to become truly digital businesses.
More than 60 percent of the insurance executives surveyed said they plan to increase the use of independent freelance workers over the next year, with 54 percent saying their freelance workforce will grow by anywhere from 25 percent to 100 percent in the next 12 months, and another 9 percent planning to more than double its size in that time.
• Design for Humans.Adaptive technologies and interfaces that interact with customers and employees in a more natural, human way, enabling insurers to move beyond simple personalization techniques to provide real-time services and risk management solutions that address customers’ actual behaviors and goals, using customer-driven insights to drive innovation.
Also described is the category of “uncharted” territory, including innovations like blockchain and smart contracts.
Accenture’s Technology Vision is developed annually by the Accenture Labs. For the 2017 report, the research process included gathering input from the Technology Vision External Advisory Board, a group comprising more than two dozen experienced individuals from the public and private sectors, academia, venture capital firms and entrepreneurial companies. In addition, the Technology Vision team conducted interviews with technology luminaries and industry experts, as well as with nearly 100 Accenture business leaders.
In parallel, Accenture Research conducted a global online survey of more than 5,400 business and IT executives across 31 countries and 16 industries to capture insights into the adoption of emerging technologies. The insurance industry report is based on responses from more than 550 respondents at insurance companies in 31 countries across North America, Europe, Asia-Pacific, Africa and South America. The goal of the survey was to identify the key issues and priorities for technology adoption and investment. Respondents were mostly C-level executives and directors, with some functional and line-of-business leads, at companies with annual revenues of at least $500 million, with the majority of companies having annual revenues greater than $6 billion.