While InsurTech expands data volume through providing a personalised link to clients, Artificial Intelligence will amplify the value of data sets by extracting more information, generating insights, and analysing and recognising patterns far beyond the capabilities of human intelligence.
The use of InsurTech coupled with Artificial Intelligence is reshaping the meaning and value of consumer data pools for re/insurers- factors which enable innovation and efficiency at every level of the industry’s processes, said Willis Towers Watson in a recent report on the power of InsurTech.
Some firms have already changed the way they store big data and have seen some “impressive” results, moving from simply organising data to creating data lakes which can be accessed and interrogated with technologies.
As AI becomes a common place tool for re/insurers, the value of data and detail surrounding insights gathered will shoot through the roof: “Already, AIs have the potential to extract information and generate insights in a similar manner to humans through voice and facial recognition, such as an understanding of stress levels in voice tone or through micro-facial expressions, decoding human emotions and using natural language processing.
“As a result, AIs can find patterns and anomalies more quickly and efficiently, deal with unstructured data and data streaming in real time, and therefore improve the quality and efficiency of decision making substantially.
“AIs also make real-time risk assessment and mitigation possible, and can detect, identify and prevent security threats by combining machine learning, text mining and ontology (relationships among properties of beings or things) modeling to curb illegal trading or fraudulent insurance claims as they happen,” Willis explained in the report.
Progressive and Vitality were named as insurers embracing change with new products that rely on telematics and wearable device technologies.
Smart apps usage is proving its dual value for insurers who can personalise products and customer relations while simultaneously generating lots of useful information on customer behavioural data.
This, Willis said, “can help them learn more about customer needs, allow them to get closer to their customers and facilitate a new type of relationship that will shift from risk mitigation to risk management.
“However, it will also have very broad implications for the likely volumes of data to be gathered and processed.”
To make full use of the future possibilities of InsurTech, Willis advises re/insurers to invest energy in creating viable long-term plans for its implementation: “Transformation won’t happen overnight, but has to start somewhere and incorporate some longer-term scenario and contingency planning to set a general direction.”
The Willis experts listed practical steps the industry can take to prepare for its technological transformation, advising re/insurers to look at “fundamentals that include a foundation-level data infrastructure that is or will be in place and a corporate culture that understands the value of data and enables innovation.
“Implement a joined-up approach to opportunities and initiatives. Pick some that have medium-term revenue targets and would be ruthless in execution,” and “lead by doing, as it will give insight, aid recruitment and retention, and may be the source of some lasting competitive advantage.”