As the Digital Revolution automates physical labour and drives the computerization of cognitive tasks through the rise of Artificial Intelligence (AI), Chairman and Chief Executive Officer (CEO) of SCOR, Denis Kessler, commented in a recent report that AI and data collection will completely alter asymmetries in insurance transactions and refocus the tasks of industry professionals.
Traditionally re/insurers have relied on information that was “incomplete, static, fragmentary and delayed”, however, the new era of big data and AI enables access to information that’s “comprehensive, accessible from multiple sources, ranked by quality and available on a real-time basis.”
“Information is becoming a commodity, and AI will enable us to process all of it,” he said.
This has made the AI revolution, which stands to impact all aspects of societies and businesses, a priority for governments and private industries.
Timely adaptation through integration and training will be key for reinsurers to cope with the disruption caused by AI.
Re/insurers “will have to invest individually, but collective investment in tools and technologies shared by market participants will also be necessary, because connectivity is key. Standards must be set to ensure that the AI tools of the re/insurance industry all speak a common language, which can only be driven by industry-wide projects,” said Kessler.
However, a recent PwC survey revealed that while most most industry experts anticipate the 4th Industrial Revolution will bring wide-ranging new opportunities for insurers, most insurance Chief Executive Officers (CEOs) remain concerned over regulation, cyber threats and speed of technological change, and attracting and retaining key digital skills.
As attracting the right talent will be key to re/insurers’ ability to capitalise on new opportunities, Kessler advised re/insurers to tackle the issue head on, putting in place training so people understand the basics of the underlying technology and what happens inside the “black box”, “to avoid the perception that AI is in direct competition with human capital, proximity between employees and AI must be established.
“Therefore a shift – or, to be more precise, a complement – to the skillset of those who work in the sector will be necessary. Analytical skills will need to be supplemented by software development skills, and actuarial science by data and AI science.”
Jim Bichard, UK Insurance Leader at PwC advised re/insurance leaders concerned over shortages of digital skills “to encourage a ‘bionic’ organisation, with humans and machines working together to improve outcomes.”
Kessler emphasised that AI will not replace re/insurance professionals usefulness, but enable a refocus of thinking and efforts on value added tasks.
“There are three distinctly human elements that are fundamental to value creation: Judgement: integrating soft considerations on top of technical and analytical considerations; innovation, creativity and heuristics: imagining and designing new systems and modes of operation; accountability: being a decision-maker capable of explaining and sharing views, while also taking responsibility for actions and their consequences.”
As reinsurers work to integrate the benefits of AI into their modus operandi, Kessler believes this will contribute to “bridging the protection gap, enhancing risk knowledge, offering a better and more granular match between risk and the price of risk, improving efficiencies, pushing the frontiers of insurability and fostering prevention and precaution.”