Artificial intelligence (AI) will “significantly transform” the insurance industry in the next three years, with insurers investing in AI to empower agents, brokers and employees to enhance the customer experience with automated personalized services, faster claims handling and individual risk-based underwriting processes, according to a new report from Accenture.
The Technology Vision for Insurance 2017 report, called Technology for People, released on Wednesday by the global professional services company, found that while the technology will be empowering, insurers face challenges integrating AI into their existing technology. Insurers cite issues such as data quality, privacy and infrastructure compatibility.
The report is based on the insights of a technology advisory board, interviews with industry technologists and a survey of more than 550 insurance executives across 31 countries in North America, Europe, Asia-Pacific, Africa and South America, Accenture noted in a press release. The goal of the survey was to identify the key issues and priorities for technology adoption and investment. Respondents were mostly C-level executives and directors, with some functional and line-of-business leads, at companies with annual revenues of at least US$500 million, with the majority of companies having annual revenues greater than US$6 billion, Accenture reported.
According to the report, three-quarters (75%) of insurance executives believe that AI will either “significantly alter or completely transform” the overall insurance industry in the next three years. One-third (32%) believe that their own company will be “completely transformed” by AI within that timeframe, and an additional 39% believe that AI will “significantly change” their company, the release noted.
“The adoption of artificial intelligence is gaining momentum within insurance, with executives pointing to AI’s potential to revolutionize the customer experience and empower agents, brokers and employees,” said John Cusano, senior managing director and global head of the Accenture Insurance practice. “Our research shows that insurers are investing in AI technologies to, among other things, improve customer interactions based on written and spoken interactions, gestures, interactive touch displays and hybrid mixed-reality platforms that merge the virtual and the real world, with each customer exchange becoming increasingly personalized.”
The rise of AI is creating new opportunities for agents, brokers and employees to deliver a better customer experience, with the technology enhancing the way sales and services are executed, facilitating faster claims processing, and enabling more accurate, individual risk-based underwriting processes, the report said. Four in five (79%) of the executives surveyed believe that AI will revolutionize the way insurers gain information from and interact with their customers. When asked about the benefits of embedding AI into user interfaces, more than half (55%) of respondents cited better data analysis and insight. Further highlighting the industry’s growing adoption of AI, two-thirds (68%) of respondents said they now use AI-powered intelligent virtual assistants either across the organization or in specific business areas to create better customer interactions.
“While insurers are increasingly aware that AI is central to their success in the digital economy, their success is by no means assured,” Cusano said in the release. “As the technology evolves, insurers will need to not only address data quality and privacy concerns, but also revamp their IT architectures to support AI’s features and technical dependencies. Insurers that focus on empowering people with a human-AI experience and intelligently integrating AI into their company will benefit from a powerful combination that drives deeper customer engagement, stronger brand loyalty and more-sustainable profits.”
Other themes in the report, include:
Ecosystem power plays – insurers are building a more prominent role in new digital ecosystems to unlock their next wave of strategic growth, complementing their direct customer relationships with a push toward a broader ecosystem approach. More than nine in 10 (94%) of executives surveyed said that adopting a platform-based business model is critical to their business and three-quarters (76%) said that their organization’s competitive advantage will be influenced by the strength of the partners and the ecosystems they choose;
Workforce marketplace – A surge of on-demand labour platforms and online work management solutions is upending workplace dynamics and traditional corporate structures, replacing them with “open talent marketplaces.” Four-fifths (79%) of respondents said they are under extreme competitive pressure to extend innovation into their workforce and organizational structure, with the report noting that a fast and effective way to do this is by leveraging workplace marketplaces to crowdsource innovation on demand. More than half (54%) of respondent organizations said they plan to grow their freelance workforce over the next year by anywhere from 25% to 100%, with another 9% planning to more than double its size in that time;
Design for humans – Technology is shrinking the gap between effective human and machine cooperation, the report said. By leveraging adaptive technologies and interfaces that interact with customers and employees in a more natural, human way, insurers will be able to move beyond simple personalization techniques to provide real-time services and risk-management solutions that address customers’ actual behaviors and goals, using customer-driven insights to drive innovation. According to the report, more than one-third (35%) of respondents said they plan to use human behavior extensively to guide the development of new customer experiences and relationships; and
Emerging technologies – Other emerging new technologies in insurance, such as blockchain – or distributed ledger technology – could address the industry’s historically cumbersome challenges of governance, accountability and digital trust. Five in six respondents (84%) said that blockchain and smart contracts will be either “very or moderately critical” to their organization over the next three years.
“The technology behind autonomous cars, connected homes and personal health is reducing claims, risks, premiums and revenue for insurers as they grapple simultaneously with transforming their legacy business in a digital age,” Cusano concluded in the release. “But that same technology is also the insurance industry’s biggest opportunity. Insurance ecosystems are expanding and driving new platform business opportunities and a more liquid workforce continues to upend traditional corporate structures. Insurers are increasingly attuned to the power of a ‘technology for people’ approach as they reshape and redefine their industry.”