The AI revolution is here – and you’re going to love it

06 March 2019 Dr Eugene Wessels is partner of data analytics at insurer King Price

You’re planning a meeting on the other side of town and enter the destination into Google Maps. Your insurer immediately calculates the best possible route based on risk and traffic patterns, and sends you the premium for that trip, based on your driving patterns and claims history. It also suggests times for your trip where the risk – and the premium - would be lower. It even adjusts your life insurance premium accordingly, if you drive like a hooligan (or stop for a sneaky burger on the way).

Science fiction? Not at all. This could be what personal and car insurance could look like in as little as 10 years. In fact, many of these technologies already exist, and are available to consumers and insurers alike. And it’s all because of Artificial Intelligence (AI), which is driving astonishing advances in the insurance business.

Thanks to AI, and based on how much data you’re prepared to share with your insurer, we have an increasing ability to make incredibly accurate predictions based on what we know about you. That’s a win for both insurers and clients. Every client of every insurance company in the world wants 1 thing: To pay as little as possible for their specific risk. Thanks to technologies like AI, policyholders aren’t seen as part of a broader risk pool any more – they’re paying only for their own risk.

We’re already seeing policies that are priced according to your behaviour, that allow safer drivers to pay less for car insurance and people with healthier lifestyles to pay less for health insurance. At King Price, we’ll soon be able to approve some claims within seconds, without a human even assessing the claim, based purely on your profile and the likelihood of the claim being valid.

You’ll also see a huge difference in the way you apply for insurance. There used to be a time when applying for insurance meant a broker coming to your house, filling out reams of forms, and then going away and processing it all. Telephonic insurance transformed that model. The next step: Some people may get asked as few as 5 – yes, 5 – questions when they apply for insurance, as the actuarial machine makes smart deductions based on your information and profile.

But while clients will see major benefits to the way they experience and pay for insurance, the big changes are behind the scenes. This is where the technology does the hard work of processing and interpreting huge volumes of data. We now have ‘black boxes’ that take an hour to run an insurance book that took between 3 and 4 months to run not too long ago. Our black box not only predicts risks and loss ratios more accurately than ever, but any of our actuaries can run this analysis on their desktop.

Let’s be clear: There’s no doubt that AI will become an integral part of every aspect of insurance in the next few years. This includes lead optimisation, underwriting, risk identification, claims processing and fraud identification, and even engaging with clients through chatbots.

This scares some people. 1 question that I often get is: What about my privacy? Let’s be clear: You only share what you want to with your insurer – and you’ll get rewarded for it. We live in an era where you should have control over your personal data, and you should be able to monetise it as well, if you so choose. The more you share, the more you benefit financially.

The other major concern around AI is its potential to replace people’s jobs. I don’t think this is going to happen in the insurance industry. For me, AI is brilliant at doing the high-volume processing jobs and analysis better than people. By freeing up people from these more routine tasks, AI will actually enable them to function at a more empathetic, high-performance level. Our people will have more time to forge more human connections with our clients, not less.

AI is a hugely misunderstood and emotive topic right now. I, for 1, can’t get enough of it.





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