Marsh & McLennan (MMC) President and Chief Executive Officer (CEO) Dan Glaser discussed the role of Artificial Intelligence (AI) in both disrupting and advancing the re/insurance industry, noting its potential to improve data use and drive more efficient value to customers, in a recent interview with A.M. BestTV.
Commenting on how AI could disrupt an industry already in the throngs of change, Glaser said; “Whether it impacts the broker more or whether it impacts the capital provider more, time will tell. I have no idea what those structural changes in the industry will be. What I do believe is that companies will need more advice and they will absolutely want to transfer some of their risk to some third-party, and so I think that the industry itself is pretty assured to have some role to play in the future.
“How that role plays out is anybody’s guess. But I happen to think that structurally both insurance companies and insurance brokers will likely use AI and other deep learning techniques to deliver more value to clients in a more efficient way.
“As it relates to our industry, clearly the ability to use lots of data in order to create more predictive capability, seems to be something that is going to be very interesting for clients. How to mitigate or how to avoid loss based upon learnings for many companies and many countries seems like a real positive.”
How the re/insurance and broker industry deals with disruption and the revamping of processes through technological breakthroughs such as AI and blockchain is a factor high on the agenda of most innovation executives.
Firms are upping the ante in their investment and preparation for a period of the greatest change the industry has undergone.
2017 was a record-setting year for private technology investments by re/insurers, which are leading the way in InsurTech investment after significantly increasing their activity in the market in Q4 2017, according to the fourth Quarterly InsurTech Briefing from Willis Towers Watson in collaboration with CB Insights.
65% of the incumbent InsurTech investments to date have been in businesses focused on enhancing the efficiency of product delivery, underwriting, claims and other administrative functions and $697 million of InsurTech funding in Q4 rounded off 2017 at a total of $2.3 billion, a 36% increase from $1.7 billion recorded in 2016 and the second highest total for any year to date, according to Willis.
The century-old insurer Lloyd’s recently announced the launch of an Innovation Lab to test new concepts, design advanced technology solutions to solve market issues and give it a place that can act as a testbed for market modernisation efforts.
Lloyd’s has also said that it will “push ahead” with electronic placement to support face-to-face negotiations, increase efficiency in the marketplace, lower back office costs, and provide a better customer service.
Meanwhile, Rafal Walkiewicz, Chief Executive Officer (CEO) of Willis Towers Watson Securities, noted recently that in the midst of conversations about disruption of the existing value chain, he believes “technology revolutions rarely result in redistribution of power among incumbents. It can be argued that incumbents’ collective response to InsurTech hype has diminished their ability to recognise true disruption.”
Commenting on the broader social implications of AI, Glaser said while it’s still unclear as to over time whether AI will be a positive to humanity or a negative; “My view is that it’s likely to be a positive and that the possibility of addressing some really deep challenges around poverty or food production, climate change and those sorts of issues, so I’d like to think of it as a supplement to human intelligence, augmented intelligence as opposed to artificial intelligence.”