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Insurers could turn up a multibillion dollar opportunity as they increase their use of digital technologies such as machine learning. Florian Mueller, a partner in Bain's Financial Services practice, shares three factors insurance companies should consider when incorporating artificial intelligence into their businesses.
Read the Bain Brief: Digitalization in Insurance—the Multibillion Dollar Opportunity
Read the transcript below.
FLORIAN MUELLER: The P&C industry has embarked on a radical digital transformation. Bain and Google have identified seven key technologies, including advanced analytics, online sales technologies and virtual reality, that all have already begun to disrupt the industry. And the impact will further accelerate in the next three to five years. Digitalization offers an immense multibillion dollar opportunity for insurers, particularly through the use of artificial intelligence.
In almost all areas of the value chain, machine learning offers high benefits: in underwriting, in claims management and fraud detection. And the potential is further magnified through additional data which becomes available through connected devices like dynamic sensors, smartphones and wearables, or the use of 3-D technology. Consider the case of a car accident that occurs in the near future. Drivers will be able to record 3-D images of the car and the damage and send it directly to the insurer. And artificial intelligence at their insurance [company] will assist the claims management and support the customer in finding the best repair shop.
But even though AI is high on the agenda of many insurers, the initiatives are still in a pilot phase, and some of the projects have shown only limited success because they have disregarded a couple of key success factors. One, select and prioritize the use cases from a customer and business perspective and choose pilots where you can really show fast success. Second, launch and iterate. Really build a proof of concept fast and use it as a basis for further refinement. And thirdly, build and embed AI capabilities within the organization to ensure sustainable results and scalability. Artificial intelligence, if applied correctly, offers great benefits for insurers and their customers.
Read the Bain Brief: Digitalization in Insurance—the Multibillion Dollar Opportunity