For the past few years, I’ve had the pleasure of speaking at several industry conferences around the region. Regardless of the specific market, one of the topics that is inevitably discussed is Artificial Intelligence; the industry impact and the potential for insurers to operate more effectively. In recent years, the technology has evolved and so have the number of companies exploring its use. However, it strikes me that most of the efforts are seeking low hanging fruit – often seeking to automate or improve the way we do things today. There is value in exploring these opportunities. However, if we were to set our ambitions a bit higher, there is potentially so much more to uncover.
For example, claims are generally an area that insurers would like to target for AI pilots…for obvious reasons…the large expense base, the significant indemnity cost and the fact that it’s a moment of truth for customers. There’s considerable focus on improving the claims process to lower costs and improve the customer experience. Objectives include things like x% reduction in claims expense or incidents of fraud, or y% of automated processing.
Instead, what about an objective of using AI to reduce claims (prevent the occurrence of them) by x%? This is much more ambitious, reducing expense and claims payouts. More importantly, there is the potential to reposition the customer relationship. The ‘claims’ function can shift from processing high volumes to dealing (in an automated fashion or otherwise) only with those which couldn’t be prevented or are highly complex. An added role could be proactive outreach to advise on risk reduction in the context of a claim that was avoided. Naturally, a more positive dialogue to have without the stressful context of a loss.
I admit this is a much harder thing to do, because it requires us to rethink what the claims function means…. but I’d suggest it’s a significantly more rewarding challenge.
The potential in AI is really unleashed when we look at it as a fundamental enabler to do things we couldn’t do before…. rather than simply another technology or tool to improve our existing processes or methods.
Only once we reframe what we are trying to achieve, and rethink what work needs to be done will AI truly make an enormous difference. It’s not just about doing the same things differently.
The momentum towards AI has already begun. Globally, some basic applications of AI are widespread across the industry, with the more sophisticated ones still largely in experimentation mode. The same is true in Australia, with pockets of AI-driven innovation.
But these are just the start. Accenture’s view is that the rate of adoption, and the power of the AI applications currently in the experimentation stages, will grow at an exponential rate. And looking forward, the benefits of AI in insurance – including faster underwriting, quicker claims settlement and improved customer experience – could be extraordinary. For insurers, this means helping them solve complex challenges, break into new markets and generate new revenue streams.
In approaching this fundamental shift in thinking, it’s important to recognise that it won’t be achieved overnight. It will take some time and must be done thoughtfully and strategically. Insurers in Australia are starting to pilot AI in their businesses. This is the right approach. Focused use cases employing a test and learn mentality is a good start. However, the companies who take a broader view about the potential of AI and have an ambitious end in mind will likely achieve much more, than those who take a tactical approach.
Australia’s insurers can learn valuable lessons from insurers abroad and even other industries. Alongside several anonymised case studies, Accenture’s latest Insurance Tech Vision describes how Ant Financial Services in China is using facial recognition. Such real-world examples show how AI-based decisions and tools are starting to have a profound impact on people’s lives and insurers’ businesses across the world.
All of this adds up to a huge opportunity for Australian insurers to impact society in a very positive way and become significantly more competitive. By shifting the discussion and understanding AI for what it is, we can fundamentally change how we work, to the benefit of Australian customers and industry.