You know how every once in a while you read something that makes so much sense that all the other sense you’ve recently encountered suddenly seems like so much nonsense? Of course you do!
Well, Bankstone News has just read such a thing. It was in one of our favourite insurance magazines, Insurance Ache, and it was all about AI and how it’s going to transform the world of insurance.
And, most importantly, as we’ve already hinted, it just made so much sense! Especially after someone explained that AI stands for Artificial Intelligence not Artificial Insemination.
Unless you’ve already read it for yourself, you’re probably all agog now to have us tell you what it said. Which, happily, is what we’re just about to do.
It’s by some bloke called Gavin Me, by the way, who works for a company called Salesfarce, although we’ve no idea who they are or whether the fact that he works for them is a good or a bad thing. Just thought we’d mention it. Credit where it’s due, and all that.
The first thing Gav explains is that we’ve had three industrial revolutions already (not just the one you learned about in school), and we’re having a fourth one right now.
Apparently, most UK homes now have assistants in, and you can get to do things simply by speaking to them. Also lots of people bought things on the internet on ‘Black Friday’ and you can use your phone to turn your central heating up or down, if you have the right kind of heating and the right kind of phone, and that’s what you want to do.
So basically we’re living in the future already. But technology isn’t here just to help us get things done. Technology wants to disrupt our entire way of life. But, actually, that could be a good thing. Especially when it comes to insurance.
Rather than consigning brokers to the scrapheap of disintermediated oblivion, as nay-saying doom-mongers would have it, Mr Me reckons it could simply ‘change the way that brokers can make recommendations to their customers and clients.’
Now that insurance providers have started using technology for the first time, we’ve had to expand the English language to accommodate this departure. Insurance firms that use technology will be henceforth be known – til the novelty wears off – as InsurTech companies.
It is these InsurTech firms (not to be confused with insurance technology firms, who mostly just specialise in selling soft and/or hard ‘ware’ to old fashion tech-free Insurs) who are “driving a revolution in the insurance industry, using data and artificial intelligence (AI) to launch services that put customers in the driving seat.”
Now, admittedly, it’s getting hard to tell exactly who’s doing the driving at this point: InsurTech firms, customers (and/or clients?), or perhaps even the technology itself, if we’re talking about driverless cars or whatever. But the point is: stuff is happening. There’s technology involved and it’s all very new and exciting.
New and exciting things involving technology invariably attract investment like flies to things traditionally held to be attractive to flies. Hence, Gav reveals, InsurTech startups ‘secured’ more than $1.7bn (£1.2bn) in investment during 2016. And that’s not even something he made up. He got it from KPMG, esteemed auditors of household names like Carillion, The Royal Borough of Kensington and Chelsea, the Guptas et al.
According to another leading consluting firm, Excenture, no fewer than 86% of insurers now believe they probably ought to to doing more innovative things, and doing them sooner, if they don’t want to get left behind. And it might not be just insurers. Gav thinks “it should be no different for brokers.”
You’ll probably have heard of something called AI (see above for disambiguation). Mr Me claims that AI “isn’t just for hip new start-ups.” Far from it. It’s “a vital tool” that can help brokers “of all sizes” to make some “shifts” that will win over your customers and attract some new ones at the same time.
The secret recipe that has allowed InsureTech firms to “built great momentum” is apparently “their unerring focus on the customer” and on providing that customer the kind of experience you would expect from a speedy, convenient tailor.
The key to delivering this is data, Gav says. Which is handy – because insurance brokers have data coming out of their ears. It’s just as question of harvesting it, with the digital equivalent of a Q-Tip and putting it to work. If they can pull this off, then brokers, he says, have nothing to fear.
Some insurance firms may already be collecting valuable data without even realising it – for instance, when they ask people where they live, or what they’d like to insure. But up to now, Gav says, all this lovely data “hasn’t been used to transform the customer experience.”
Clearly this must change. The good news is that once you’ve asked your customers a bunch of questions and made a note of the answers, it’s just a question of plugging all that data into something technological and ‘analysing’ it to help you decide which kind of insurance to recommend.
“In short,” Gav sums up, sensing that his audience may be tiring of such a deluge of hard-core tech-talk, “smart analysis of the data they have is enabling brokers to be proactive and relevant to their customers.”
And that’s where – perhaps just slightly later than advertised – AI comes in. Because “AI can automate this kind of analysis at speed, often using correlations in the data that teams may previously have missed, to deliver ever-more useful predictions and solutions.”
For example, Gav offers, if brokers feed it with the latest data about whether it’s going to snow or not, and where it’s going to do that snowing if it does, and where there might be places with roofs nearby that you can drive your car under, AI can correlate that with the stated locations of customers who don’t have garages to park their cars in and tell them where the nearest place is where they could park their car safely without the risk of it getting snowed on.
Offering cold weather parking advice like this could certainly help brokers stand out from the crowd. That’s why Gav believes that as “tech disruption continues apace next year” (presumably it feels it’s done enough this year) “it will be the brokers that harness technologies like AI to laser-focus on the customer experience that will see the greatest success.”
So what are you waiting for, Mr Broker, track down some AI tech and get harnessing!
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