A.M. Best: Insurance Has an Imperative to Address AI and the "Art of the Possible"
Louisiana Comp Blog
A.M. Best recently hosted a webinar on the Insurance AI Imperative, featuring expert speakers and sponsored by Cognizant. Host Jon Weber of A.M. Best framed the discussion as an opportunity for some insurers to get ahead of the pack, while others could fall behind. The panelists were Jennifer Herz and Mike Clifton of Cognizant, a multinational IT company.
Mike Clifton kicked things off in response to a question from Weber regarding whether AI is more “sizzle than steak” by explaining that AI is a vast area of technology. “Being an early adopter fits depending on your business profile and business acumen,” he said. “If you look at the spectrum of AI, there's people who think of AI as purely just the ability for a machine to make a decision.” However, according to Clifton, the excitement in the industry is coming from the maturity of the technology – machine models and deep learning. Ultimately, he said, modern insurers must “digitally pivot and AI should be part of that strategy.”
For the timeline of a fully mature AI timeline, Clifton again emphasized that it depends on the company's business model and efficiency. Herz added that, “it's a moving target, what we think is fully mature today, likely 24 months from now is going to feel completely different,” but that deriving the most benefit from AI initiatives through a carrier's business priorities is the key.
Weber then shifted the discussion to the “disruptions” that AI is due to create, other than competition from insurtechs and start-ups, which has been much reported on throughout the industry. For Clifton, it all comes down to the insurtechs providing focus. “They give us the ability to laser in on a particular set of problems, like claims or catastrophe management,” he said. “That helps because it makes the value of that interaction well-known. The disruption elements are still occurring from an insurance industry perspective in that you're seeing a lot of the easier risk appetites of the products being looked at as very targeted spaces to automate and use AI.” Clifton cited warranty coverage and rental coverage as examples.
With respect to AI trends within the insurance industry at large, Herz said that incorporating different technology skill sets (especially among millennial workers) is something she hears frequently from the companies she works with as talent leaves the industry and new talent enters. Further, she noted that there is an emphasis on “shoring up the data infrastructure of companies” so that they can integrate data analysis, third party data and, thus, AI technology. These efforts marry with the “evolution of the customer experience” so that as technological innovation continuously accelerates, so do the needs of the customer. This is what Cognizant refers to as the “art of the possible” in adding with AI to the entire value stream of insurance.
Making the case that a “wait and see” approach is insufficient, Herz said that it's all about where you want to drive growth. “Most companies can't invest everywhere and have to pick where are the places they can get the most value. It's a matter of how do you test and learn quickly and then how do you scale so that you can continue to drive benefit as you move through the [AI] maturity curve,” she explained.
At the conclusion of the webinar, Weber invited the panelists to voice their essential takeaways from the presentation. For Clifton, it was all about the core of machine learning and models in actuarial science transferring to the frontlines. “AI will be foundational to how we implement insurance in the future, especially property and casualty,” he said. Herz added to the point, saying that she wanted registrants to remember that “understanding where you are and what your business strategy is and how the AI ecosystem can enable that strategy” will help provide focus.
This A.M. Best webinar is available on demand here.
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