David Sexton of Cognizant on the imperative for AI adoption in the insurance industry
David Sexton, VP & Head of Insurance Practice, UK and Ireland, Cognizant. Cognizant is an American multinational corporation that provides IT services, including digital, technology, consulting, and operations services. Here David Sexton shares with us the need for AI in the insurance industry.
The impact of Artificial Intelligence (AI) is spreading, probably further than many people thought it might. The next industry to be fundamentally transformed by AI is insurance. From product development, underwriting and claims, to customer service chatbots, risk assessments and quotations, technology is being deployed across the sector to provide faster, more accurate services. What is interesting, however, is that while some major insurance companies are investing aggressively in AI, many are moving slowly, unsure of how best to deploy these technologies.
As Cognizant’s recent AI survey shows, only half of insurance executives consider AI technologies to be ‘extremely’ or ‘very important’ to their company’s success, lower than for any other industry, such as financial services, healthcare and manufacturing. Looking ahead three years, only 36% felt AI would be very important, again lower than any other industry.
This lack of awareness around the importance of AI is worrying as new entrants to the market start making an impression. These insurtechs, a term used to describe new digitally focused entrants in the market that are using technology innovations to increase savings and efficiencies, are using AI capabilities to introduce a new range of innovative products. These include instantly customisable life insurance and on-demand property coverage. Consequently, traditional insurance companies are now facing unexpected competition. It is critical that they pick up the pace when it comes to technology investment and adoption, or face being left behind.
Enhancing the customer experience
Most insurers already using AI technology have focused their investment on customer service projects such as chatbots. This allows them to automatically capture customer information and respond to enquiries. Our research found that the best applications for chatbots in insurance include product management, marketing, underwriting & policy acquisition, policy servicing and claims management. Moreover, the research also found that insurance executives who were familiar with existing AI projects at their companies most often cited ones related to customer service (56%). This is likely because chatbots allow customers to receive personalised product recommendations and quotations almost instantly, giving consumers and business customers the ability to purchase most insurance products online in minutes. For example, the chatbot Amelia is used by insurers such as MetLife to combine machine learning (ML) with natural language processing (NLP) to make decisions based on real-time conversations.
Whilst many may worry about AI taking jobs within the industry, these technologies are actually enhancing many jobs carried out by humans. For example, call-centre representatives can receive information based on data from technology to assess the sentiment and mood of a discussion whilst a call is in progress.
Faster, more accurate underwriting
Across the insurance industry, AI technologies can now also be applied to a wider variety of data sources to improve the accuracy of risk assessments and quotations. For example, these tools can automatically analyse real-time data from security systems or by using drones when underwriting homeowner-insurance applications. Looking to car insurance, AI tools can be used to conduct analyses of telemetry data and provide insight into driving behaviour to inform car insurance quotations, such as how fast the customer drives on average, how quickly they accelerate and whether they drive faster than the speed limit. Zurich Insurance Group, for example, has partnered with the Swedish insurtech, Greater Than, to allow it to analyse a potential customer’s driving data compared to a set of reference profiles created from more than a decade’s worth of collected data, allowing the company to customise and personalise their customers’ premiums based on the individual’s driving behaviour.
Reimagining the claims process
The claims process is just another area in which AI can be applied to automatically audit thousands of open claims when action can still be taken, rather than reviewing of a sample of claims after they have closed. As such, insurers will be able to move beyond the traditional reactive model of paying claims after a loss and be able to adopt a proactive, preventive model of helping customers avoid losses in the first place. For example, commercial property insurers can use the data generated by smart buildings to help their customers reduce the risk of fire or water damage, and the data generated by telematics devices in vehicles can allow car insurers to provide customers with feedback on their driving behaviour.
Now is the time to adopt AI
AI can, and is, revolutionising insurance. It is being used in every function of a business to transform the way organisations operate. As highlighted, established players have two choices – either ramp up their investment to compete with new, disruptive insurtechs, or partner with this innovative competition to access the technology, unencumbered by legacy systems and processes. If they want to compete in a market driven by the customer experience, then getting on board the AI bus is the only way to ensure they do not get left behind.
Ireland is key launchpad for US expansion into Europe
The first transatlantic cable was laid between Newfoundland and Valentia Island in County Kerry, Ireland, in 1858. It was a flawed effort; the connection was poor, causing enough issues with efforts to send telegrams along it that major repair efforts were set underway immediately - efforts which ended up further damaging the cable line, severing the connection just three weeks later.
This first step towards transatlantic subsea communication, shaky as it was, laid the foundations of more than a century and a half of information exchange across the ocean, between the East Coast of North America and Western Ireland.
It’s been 163 years since the completion of the first transatlantic cable, an event which cemented Ireland’s position as the landing stage for subsea connections between Europe and the Americas. That position has, in no small way, been a driving force behind the country’s modern role as a landing stage for US and Canadian firms looking to do business in Europe.
Today, some of the largest firms in the world, like Pfizer, Janssen, Zurich, Metlife, Google and VmWare use Ireland for their European Headquarters. The combination of an English-speaking workforce (a boon made all the more important as Brexit makes the UK and the north of Ireland an increasingly complex environment that provides diminishing opportunities to access the rest of Europe), a cultural and regulatory landscape that welcomes foreign investment, and world-class connectivity makes the country an unparalleled choice for firms looking to establish a foothold in the EU.
As a result, Ireland has become one of the world’s leading data centre hubs.
Based on leading data centre firm Interxion’s Data Gravity Index, Dublin will be among the top five European cities that will contribute to Europe’s growth in data in the coming years, following London, Paris, Frankfurt and Amsterdam. The amount of data generated in Dublin itself is expected to grow alongside its economic expansion, with the Data Gravity Index also predicting that Dublin will outpace cities and data centre hubs like Mexico City, São Paulo, and even Shanghai, to be among the top 20 cities to experience annual data growth by 2024.
Ireland ranks 6th in the 2020 EU Digital Economy and Society Index (DESI), meaning that it is among the leading ranks of EU Member States in terms of the uptake and use of digital technologies. Likewise, the trend to locate data centres in Ireland serving overseas clients will continue to generate increasing amounts of international traffic
Managing the Dublin Data Boom
According to Interxion, subsea connectivity will continue to play a massive role in helping both international and domestic organisations digitally transform themselves to meet the challenges of changing markets post pandemic.
As the pace of global digital transformation - and the subsequent need for more connectivity - accelerates like never before, this rapidly developing world is driving urther demand for these cables as individuals and organisations become increasingly reliant on subsea cable’s exceptional data speed and capacity.
According to experts at Interxion, this connectivity will be pivotal to Ireland’s continued success in attracting international companies in the technology, pharmaceutical and financial sectors.
The subsea cable industry is a key contributor to the Irish economy across many sectors. The draft National Marine Planning Framework reported that subsea international networks make Ireland an attractive region for investment for the technology and digital sectors. Telegeography states that there are twelve existing subsea cables connecting Ireland to the US and UK, and a further four systems are under development. The Iish government’s statement on the Role of Data Centres in Ireland’s Enterprise Strategy identified Ireland as a location of choice for many different sectors reliant on digital and telecommunications capabilities, all of which in turn rely on subsea cable interconnectivity.
Subsea cables are of strategic importance to Ireland’s future as a catalyst for economic and societal prosperity. Ireland can be the ideal location for your company’s expansion plans. To find out how, you can hear from leading experts throughout the data centre and digital infrastructure industries on June 15, 2021, as speakers from the IDA, Aqua Comms, GTT Communications, euNetworks and Interxion discuss subsea cabling, digital transformation, Data Gravity and the fate of Ireland’s digital economy.
Key topics will include:
- Key facts about existing subsea infrastructure,
- Future plans,
- Challenges (including Marine Maintenance) and opportunities,
- Terrestrial networks (demand vs supply);
- Ireland's role as a gateway to Europe
The virtual panel (which is taking place between 10:30 PM - 11:30 PM JST on June 15, 2021) will conclude with a 20 minute Q&A. Mike Hollands, Senior Director of Market Development at Interxion, will moderate the event.