News

Does AI deserve the headlines?

15th August 2017

According to Mazdak Rezvani, the CEO of Chatkit, it does.

Most tech giants are investing heavily in both applications and research, hoping to stay ahead of the curve of what many believe to be an inevitable AI-led paradigm shift.

Undeniably, there has rarely been more excitement generated by a technology than the current buzz around artificial intelligence (AI).

What is artificial intelligence?

Artificial intelligence is the simulation of human intelligence by machines. According to one dictionary definition, artificial intelligence is:

The theory and development of computer systems able to perform tasks normally requiring human intelligence, such as visual perception, speech recognition, decision-making, and translation between languages.

Artificial intelligence techniques and tools that use them are already ubiquitous. In fact, most of us use them on a daily basis, often without even noticing. Take the Virtual Personal Assistants on our mobile phones (such as Siri), self-driving cars, or the ranking of the web pages given in response to our queries in a search engine. These computer-performed tasks all fit the definition of "normally requiring human intelligence".

The following diagram, published by PwC in 2016, highlights the huge range of topic areas and disciplines within the study and delivery of artificial intelligence.

PwC - Topic areas within artificial intelligence

Fundamentally, though, artificial intelligence is about transforming vast amounts of complex, often unstructured data into actionable insights. It is this application that has the potential to transform the insurance industry.

Artificial intelligence and the insurance industry

The levels of data now available to insurers are impossible for humans to process. Artificial intelligence techniques can provide real-time visibility and management of this information.

Artificial intelligence techniques can be used, for example, to establish rules and algorithms that deliver accurate analytics and predictions. The insights obtained can be used to drive process decisions to improve efficiency and consumer outcomes. Tools that use these techniques can even extract data from one part of a business and place it in another, linking the sectors and enabling them to learn from each other.

Importantly, real-time visibility and management of complex information can also reveal hidden insights that would have been missed if the processes were to be conducted by a human.

Insurance carriers can benefit from these capabilities in many areas.

Claims management and fraud detection

Machine learning has already been applied to drive efficiency and cost savings into claims management. Some examples are:

Underwriting and loss prevention

Artificial intelligence offers huge potential for risk management, with applications such as:

Communication

Consumers now expect engagement with service providers to be immediate, reliable, and on their terms through platforms of their choosing. Until recently, this engagement meant contacting a call centre, with delays and queues to connect to an operator. Artificial intelligence tools, chatbots in particular, have already revolutionised this space.

Gartner Inc., who provide information technology related insight for IT and business, recently predicted that by 2020, 85% of all customer interactions will be handled without any human intervention.

Is the hype justified?

Artificial intelligence won't solve all ills, but it can be a force of differentiation that will empower insurance carriers to drive value across their businesses.

Despite significant developments in artificial intelligence over the past decade, full automation and computer super intelligence is still a while off yet. Many, however, do agree with Mr Rezvani.

Artificial intelligence techniques will lead a paradigm shift within the insurance sector - ignore it at your peril.


Content produced exclusively for Total Systems plc, specialist providers of insurance software for quote; rating; policy administration and claims

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