Are you ready for the rise of robo-insurers?

Many insurers are nervously biting their nails about whether their jobs are under threat from artificial intelligence.

For those wondering how AI will be used to shake up the insurance value chain, I hate to break it to you, but this technology has already sunk its teeth into the industry and it isn’t going to let go.

Data released by insurance claims automation provider Sprout.ai shows 59% of insurers with more than 100 employees are already using generative AI in their organisation.

A staggering six out of 10 insurers are already using AI, which has the power to reshape claims, distribution, underwriting and pricing – as well as kill you in the next two years, if Prime Minister Rishi Sunak’s tech adviser is to be believed.

Rather than shrug and accept annihilation, or rush to top up your pension plan so you can head for early retirement, if you take a moment to understand the way AI can shape the insurance value chain you can remain a part of the industry.

Under the hood

AI can already help to determine aspects of claims such as image recognition, data unification, data analysis and predict potential costs.

It can aid in detecting and preventing fraud by examining data patterns and identifying suspicious activity.

In the future, as AI-powered chatbots start to scour your social media, it will be able to provide you with personalised recommendations and support.

The way insurance products are sold and created will change.

Large amounts of data can be analysed by AI algorithms to identify new risk factors and pricing models.

Top bosses need to examine their operating models and understand where as well as when disruption from AI is likely to happen.

AI will allow any company with access to relevant risk information – such as those Facebook photos of you doing dangerous sports on your holidays – to offer cover tailored to your needs and priced for your penchant to leap off cliffs in far-flung places.

But before you throw in the towel on being a human insurer, questioning how the heck you can compete with this, remember AI is already being used in underwriting and, I promise, despite the headlines screaming Armageddon, it isn’t necessarily bad news.

It could be used by brokers to optimise their tasks, spot gaps in coverage and find potential deals for clients, freeing them up to support a substantially larger client base. AI could finally end underinsurance.

It could also create new human jobs that don’t exist today.

Experts who can kick the tires of technology and make sure the AI is complying with regulation and delivering suitable products and services to customers are likely to be in high demand.

While we are in the early days of governments talking about how AI should be regulated, it is hard to imagine watchdogs not wanting insurers to take precautions to protect customer data.

I firmly believe the future is far from bleak for human insurers, so long as they prepare today for this seismic change heading the industry’s way.

So, what can human insurers do to make sure they still have a job in a decade’s time?

Get a grip

They need to get to grips with the seismic changes in technology coming to the insurance industry and recognise being AI-savvy is no longer just the job of IT teams.

Top bosses need to examine their operating models and understand where as well as when disruption from AI is likely to happen, as this technology can mean different things for different business lines.

In addition to being able to understand and implement AI in their own businesses, insurers need to understand the impact this type of technology will have in the wider world.

For example, if car accidents will be reduced through use of vehicles with self-driving capabilities and in-home flooding will be prevented by sensors, what are you charging the premium for?

Carriers will need to rethink their customer engagement, product design and how they earn money.

Profit pools will shift, new types and lines of products will emerge, and how consumers interact with their insurers will change substantially.

Rise of robo-insurers

Rather than resent the rise of AI, insurers should ask themselves 'what is better than AI and humans'? I’ll tell you what: a robo-insurer.

To create a robo-insurer requires sustained investment in people as well as technology.

The next generation of successful frontline insurance workers need to be technologically adept, willing to work with a mix of semi-automated as well as machine-supported tasks and think outside the box.

Robo-insurers need to confidently question or come up with solutions where AI falls short.

Will some jobs in the industry go? Inevitably.

Will humans capable of understanding complex risks and deal with stressed customers at the point of claim still be required to ensure insurance continues to keep its promise to provide a safety net when customers fall? Definitely.