Insurers are investing in AI & ML at record levels. Big Data World Asia speaker Dr Vishnu Nanduri details the latest developments
While machine learning has transformed many industries over the past decade, one area that is still playing catch-up is insurance. It’s a sector used to finding itself trailing behind other industries’ tech adoption, where high running costs of legacy systems squeeze budgets to such an extent that it’s hard for firms to stump up the cash necessary for driving innovation. While online comparison services have proliferated in recent years, signing up to and managing the policy invariably involves the pens, paper, and printers that other digitally-transformed industries have long since left behind.
But as data systems have matured, and AI, deep learning and connected devices continue to proliferate, the insurance industry is growing up and starting to harness the numerous benefits AI and ML can offer. Like all other industries with growing stockpiles of data, models can be deployed to dive deeper – transforming toothless data into tools of automation and prediction.
Machine learning models have proven adept at speeding up functions, for instance expediting claims that meet defined criteria. Natural language processing is also being used to derive insights from text data in claims forms, social media, emails or chats. And data from connected devices is being used to improve decisions about health policy premiums — or in the case of telematics data, deliver better car insurance rates and prevent fraudulent claims.
Just as in other industries, disruptive first-adopters are emerging as market leaders. Despite the rising number of them entering the space, such as ML-based insurance policy provider Lemonade, traditional investors are also getting in on the act. According to Genpact, 87 percent of insurers are investing more than $5 million in AI each year.
Many in the sector are optimistic that they can turn their tardiness into an advantage by learning from the failures and successes of other industries. It’s important not to lump all insurers into the same basket. In fact, there is a spectrum of adoption. Some companies are still deciding whether to invest in a data warehouse, while others, like Ping-An, are already using AI to settle millions of claims a year.
One such insurer that probably sits in between these two poles is German-based Munich Re, which has steadily increased its investment into big data and analytics in recent years. Ahead of his appearance at Big Data World Singapore on 9 October Techerati spoke to Dr Vishnu Nanduri, who heads up the Data Analytics program for the company’s Non-Life reinsurance business (for SEA, Japan, Korea, and India), a type of insurance that reduces risk by passing on a portion of a policy’s liabilities to another provider.