Artificial intelligence (AI) will disrupt how re/insurance organizations do business. The industry must embrace it as the technology will help deliver better, faster, more accurate, and cost-efficient outcomes, Xceedance CEO Arun Balakrishnan noted in a recent interview with Reinsurance News.
“If people believe this is a choice, they are wrong because it is not a choice. There is some scepticism in the commercial insurance industry that AI can’t do much, but I don’t think that’s true at all,” Balakrishnan stated.
“I believe the way people will embrace and use AI will be to become more efficient at their job, to do it faster and more accurately. When that happens, it will help you become better than your peers. And eventually, everybody will want to adopt cognitive technologies.
“However, the widespread use of AI will also significantly affect the insurance products that we must develop to manage risks associated with data confidentiality, transparency, security, and abuse, among other things,” Balakrishnan explains.
Balakrishnan believes digitisation of the re/insurance industry is an ongoing process with many variables.
“There is a wide spectrum all over the world as different micro-ecosystems have been created within the industry. Those micro-ecosystems are a combination of geography and product line, and the level of digitalisation tends to vary across each of them.
“Geographically, for example, the level of digitalisation is higher in some developing markets, like China or South Asia, compared to developed markets like the US, UK, Europe, or Japan. The re/insurance industry might not be as mature as in the developed countries, and there might be some catching up for them to do. Still, the way those regions are adopting digitalisation is noteworthy.
He continued: “If you look at the innovation happening in India, the financial ecosystem in the country with digital payments, for example, is probably the best in the world today. India might not have high insurance penetration, but the technology infrastructure is far ahead of most places.”
How technology is developed and utilised is moving very fast, and how the re/insurance industry interacts with it must also rapidly evolve and adjust to it, Balakrishnan highlighted.
Adding: “Whether we talk about AI or technology in general, or blockchain, in the end, these are all methodologies. The critical goal we need to reach is that the re/insurance industry must become genuinely technology-led and digital.”
In a recent demonstration, the Xceedance team uploaded an extensive property survey report to the secure Azure OpenAI Service with the ChatGPT platform built into it. They prompted generative AI to function like a property underwriter and asked questions based on that report.
Usually, Balakrishnan explains, a 30-to-50-page property survey report takes an underwriter a couple of hours to read, plus some time to understand the risks associated with the property. But by using AI, the underwriter could instantly obtain the key highlights, ensure no critical information is missed, and comprehend the report faster.
“Insurance is the original data science business. We were trying to predict losses and calculate premiums three hundred years ago. Today, the vast world of data exists. Integrating artificial intelligence with existing and upcoming data sources has immense potential to revolutionize the industry,” Balakrishnan concluded.
