November 27, 2019 by Jason Contant
Forget about attracting talent, keeping up with rapid change, or complying with a myriad of regulations – what’s really keeping insurance executives up at night is scaling artificial intelligence (AI) for their business.
According to a recent report from Accenture, based on a global survey of 1,500 C-level executives across 16 industries (including 113 executives in Canada), 81% of insurance executives believe they risk going out of business in five years if they don’t scale artificial intelligence (AI), compared to 75% across all other industries globally.
Almost all (94% of) insurance executives acknowledge they know how to pilot AI, but they struggle to scale it across the business, found the report, AI: Built to Scale. This percentage is drastically different from other industries, where just over three-quarters (76%) say they know how to pilot AI but struggle with scale.
Released earlier this month, the report polled 1,500 C-suite executives from large companies in 12 countries across 16 industries to uncover the success factors for scaling AI.
The research found three distinct groups of companies with increasing levels of capability required to successfully scale AI:
The companies in Accenture’s study collectively spent US$306 billion on AI applications in the past three years; the return on investment gap among them is major. How significant? There is a US$110-million difference between companies in the proof of concept stage and strategic scalers, the report said.
In fact, researchers found a positive correlation between successfully scaling AI and key measures of financial valuation. The average lift was 32% on enterprise value/revenue ratio, price/earnings ratio, and price/sales ratio.
So, how do you succeed at scaling at your brokerage or insurance company?
The research revealed the following critical success factors; these will separate strategic scalers from organizations in the proof-of-concept stage.
Drive “intentional” AI
Strategic scalers pilot and successfully scale more initiatives than their proof-of-concept counterparts – at a rate of nearly 2:1. Also, they set longer timelines. For example, they are 65% more likely to report a timeline of one to two years to move from pilot to scale.
To successfully scale, companies need structure and governance in place. The strategic scalers have both. Seventy-one percent say they have a clearly-defined strategy and operating model for scaling AI in place; only half the companies in the proof-of-concept stage report the same.
In addition, strategic scalers are far more likely to have defined processes and owners, with clear accountability and established leadership support with dedicated AI champions.
Tune out data noise
Strategic scalers recognize the importance of business-critical data, identifying financial, marketing, consumer and master data as priority domains. They are more adept at structuring and managing data. Sixty-seven percent integrate both internal and external data as a standard practice, compared to 56% of their proof-of-concept counterparts. Strategic scalers also use the right tools: for example, cloud-based data lakes, data engineering/data science workbenches, and data and analytics search.
Treat AI as a team sport
For strategic scalers, teams are most often headed by the chief AI, data or analytics officer. Teams are comprised of data scientists; data modellers; machine learning, data and AI engineers; visualization experts; data quality, training and communications, and other specialists. A full 92% of strategic scalers leverage multi-disciplinary teams.
“Scaling the exponential power of AI across the enterprise is a journey,” the report said. “Those that learn the lessons on each path will reach a place where the business is seamlessly fused with intelligence that boosts productivity and effectiveness. The result: industrialized growth through unassailable competitive strength in everything from organizational effectiveness to brand perception and trust.”
What utter BS. Really? I can not believe what I am reading. If these insurance Executives are having this hard of a time, then they should just quit now. They operate in one of the easiest industries that exist. What is the problem? You identify a risk. You price that risk. If your Actuarial staff can not do this, then get new ones. You operate in an industry that offers products that people and companies need and are sometimes required to have. You can design / manufacture / market your product in one day. So what is the problem. Try being a manufacturer in the transportation industry. The time line from Identifying a need / designing a solution / manufacturing / marketing your product is years. FYI. With your attitude, your would not last. So question remains, WHAT IS THE PROPLEM?