Insurance underwriting could be made “faster and more accurate” by artificial intelligence in the coming years, according to technology consultancy Infosys.
For its "Digital Outlook for the Banking and Insurance Industry" report, the company surveyed more than 100 insurance company chief executives and found the use of artificial intelligence (AI) to automate underwriting was the third-biggest trend influencing the industry.
The report also noted that an Oxford University study of 702 different jobs identified underwriting as the fifth most likely to be automated despite its intricacies.
“A few years ago it would have been unthinkable that this complex profession would be taken over by machines, yet thanks to advances in AI – one of the hottest areas in ‘insurtech’ – this is looking more likely,” the report said.
The use of drones to map terrain and inspect crop health for agricultural insurance purposes, or the use of a photograph self-portrait to predict a person’s life expectancy were two real-world examples given by Infosys for how AI is already changing how insurers operate.
“There are other advantages as well. AI can access customers’ social profiles for information, which is less intrusive than sending an agent out with a questionnaire,” the report said.
“It can also analyse a lot more data than humans can, to produce a granular risk profile that insurers can use to pitch the right amount of insurance at the right price to every customer.”
While AI-driven automation of underwriting is “real enough” to be considered a top trend in the next three years, the report did note that it is unlikely to become a practical solution in the near term.
“At the current level of evolution, algorithms need to be supervised and they will continue to be trained by human beings for some time to come,” the report said.
The use of big data to understand clients and improved cybersecurity were listed by the report as the first- and second-biggest trends, respectively.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 25 Jun 2018Sam Henderson to retire from financial adviceBy Reporter
- 25 Jun 2018CBA to spin off 'independent' CFS GroupBy Reporter
- 22 Jun 2018Awards night recognises young adviser of the yearBy Reporter
- 22 Jun 2018AMP chair urges RC to not to restrict business modelsBy Killian Plastow
- 22 Jun 2018David Murray takes reins as AMP chairmanBy Reporter
- 22 Jun 2018Fitzpatricks announces new licensee bossBy Aleks Vickovich
- view all