Currently business is not normal, but it might be fostering the rapid development of artificial intelligence (AI) technology.
AI is not new. It has been around for many years but the adoption has been rather sluggish. Each year there are countless discussions on whether AI will revolutionise the industry and whether it will finally reach it’s full potential, which it is arguably still nowhere near. Despite it lingering in conversations for so many years, adoption has not been as fast in areas like insurance, simply because the industry is often slow to change and has legacy systems in place. Insurance firms have built up their technology over many years and are unlikely to throw them away simply to introduce an AI tool.
The coronavirus has been a shockwave to business across most sectors. One of the aftereffects is that businesses have taken a long, hard look at their operations to see how they can survive the current situation. Insurance is one of the industries to be hit heavily by the pandemic, especially the large enterprises that are largely reliant on manual workloads or working in the office. Traditional institutions have suddenly had to cope with staff working from home and face-to-face meeting, such as claims assessments, being largely off the table.
A study from Business Comparison highlighted the inexperience of working from home in the insurance space. It claimed that just 5.2% of workers in insurance and financial services primarily work from home, while 38.9% have never worked from home. With such a high percentage with no remote working experience, companies have had to ensure their staff are ready for what to do. The companies have also had to ensure their staff can physically work from their homes, typically resulting in the need of cloud environments so they can still have access to what they need. All in all, this has resulted in companies accelerating their digitalisation efforts.
This is not just localised to the insurance space, with all sectors looking to improve their digital power. A study from B2B software search website Capterra claimed that 51% of small to medium-sized businesses have had to implement new software due to the pandemic. Furthermore, the report claims many companies have had to reallocate their annual software budget and move timelines forward.
Digitalisation is not new, but it is now more important. As an industry, insurance has been getting very used to technology. The InsurTech sector has seen $15.9bn invested between 2016 and 2020, with total funding increasing each year – last year saw a new high coming just shy of $6bn. It’s not just the capital increasing, but the number of InsurTech companies closing deals has increased yearly, with 258 businesses raising funds in 2019. The sector is booming and while total funding is down in H1 2020, compared with last year, the number of deals is higher. Suggesting the sector will be fine.
Speaking on a recent webinar on the changing face of the claims industry, Tractable co-founder and president Adrien Cohen said, “What we’re hearing from our clients across the world is an increased sense of urgency. With Covid-19, there has been more urgency in the market for virtual technology. I think insurers want technology that’s going to be able to help the appraisers, the body shops, and eventually provide a touchless experience for their policy holders, where it makes sense.” Cohen added, “This is not new, this is rather the acceleration of the trend that was already in place.”
With companies looking to increase their digitalisation, AI technology could see itself at the top of the menu. The technology is dynamic and can be used across numerous parts of the value chain. Whether that is for automating workflows, enhancing claims processes, conducting virtual assessments of damage, improving decision making and this is just the surface of what it can do. With face-to-face interactions still unadvised, insurance firms could be leveraging AI to meet the same standards as they would expect with in-person interactions.
For example, in auto insurance AI technology can be used to improve the consistency and efficiency of claims. Cohen said, “If you use AI for appraising the damage, it’s a bit like having an expert that has seen millions of vehicles and can proceed to perform this task in seconds.” In this scenario, the technology enables the insurer to assess the vehicle damage remotely and to the same high-standard they would have in-person.
Akur8 chief of sales Brune de Linares said, “We see AI as an unprecedented opportunity to tackle challenges raised by the coronavirus. Pressure is higher in profitability and speed for insurance organizations that will need to find new ways to optimise their processes. However, insurance companies are facing an uncertain period leading to short term selection of the investment. AI startups should be ready for longer sales processes.”
There may still be some challenges for AI companies during this time, but they are well suited to benefit. Companies will be looking to buy solutions to ensure the quickest access to digital services, rather than trying to build it in-house, which takes longer to accomplish. Business stability, and by extension business continuity, is tough to predict at the moment and anything that can help bolster an online presence as quick as possible will be of great importance. Linares said, “No one can now under consider the importance of business continuity and remote working solutions that bring agility and allow teams to pursue activities.”
Linares added, “We think Business stability can only be possible by leveraging Innovation and new capabilities. Speed and Agility are prerequisites for insurance companies to address this crisis and incertitude related. You need to understand quickly the impact of unprecedented events like a global pandemic and to move fast – AI solutions are unique to gain this agility.”
To that extent, Akur8, which develops AI-powered pricing software found that there has been a 300% increase in the number of models being run by its clients during the lockdown. “[This is] proof that their pricing teams were fully at work thanks to cloud based solutions,” Linares said.
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