The role of artificial intelligence within the insurance industry is becoming more prevalent than ever. At this year’s omni:us Machine Intelligence Summit, Torsten Oletzky, a Professor at the Insurance Institute of Köln, gave some amazing insights into how the industry has a responsibility to renew itself to remain competitive, and discussed how AI is playing a key role in this reinvention. He doesn’t see a world where the incumbents just stay where the old business models are, while only the startups and insurtechs adopt the new AI-driven models, and he’s definitely right.
In recent years, it’s been recognised that traditional insurers have incredible amounts of potential value trapped within their businesses through inefficient manual processes eating up resources and manpower. “Without innovating their business models, insurers run the risk of losing the battle for customer interface” says Prof. Oletzky. Naturally, digital innovation provides an opportunity to address these challenges, and with a huge influx of startups providing innovative solutions, what can more established insurance companies learn from these new insurtechs?
The success of digitization must be measured by the extent to which it contributes to addressing the key challenges facing the insurance industry today and insurers, as Prof. Oletzky points out, can’t afford to wait. Having an open-minded approach and collaborating with insurtech startups is vital to ensuring companies can begin creating real change and ultimately improve customer experience and perception overall. Prof. Oletzky even advised that the overall process could be enhanced by companies appointing an insurtech ‘advocate’ to liaise and ensure that both parties are drawing the most from the collaboration.
In his latest book ‘Artificial Intelligence and the Two Singularities‘, author Calum Chace points out that humanity has already been through multiple industrial revolutions where human mechanical skills were replaced with tools and machinery. The only difference now is that it’s our mental functions which are being replaced – something new, and a first in human history, so no one knows exactly what to expect… yet.
But, according to these experts, traditional companies should be open to this change. Insurtech startups are providing prime examples of innovative business models, that are malleable and can adapt to the agile and fast development of the industry. They also provide access to a pool of new and young talent, bringing fresh minds, creativity and innovation to the table. It’s also important to remember that AI will actually be a catalyst to create more jobs, and the perception of instantaneous unemployment is a myth. Prof. Oletzky believes that AI’s role within the insurance industry is still in its infancy stage, and this will continue to grow rapidly in the years to come.
After many years of research and implementation, we’re at a pivotal point with AI innovation and it’s likely to play a role in every sector of the economy, having a profound effect on social and even political institutions. Specific uses of AI are beginning to yield tangible results which are providing a clearer picture of how AI will inevitably transform the workforce, and the workplace, particularly within the insurance industry. It certainly won’t be a quick fix, but it’s an essential next step if the potential of artificial intelligence is to be realised by insurers and their customers alike.
Read here to get a brief summary of the highlights at the omni:us MI Summit event.