AI in Insurance: A Tectonic Shift on the Horizon By Rob Tyrie
The Insurance Sector: Generating A Ripe Ground for Disruption
Let’s cut to the chase: the insurance industry is on the cusp of a seismic transformation, and AI is the catalyst. For too long, the sector has been mired in legacy systems, cumbersome processes, and a one-size-fits-all approach. But as we stand at the intersection of data science and machine learning, the game is about to change. Think of it as the quantum leap in insurance — akin to how quantum mechanics shattered classical physics paradigms.
The GPT-4 Revolution: More Than Just a Language Model
I’ve been experimenting with various versions of GPT (Generative Pre-trained Transformers), and let me tell you, GPT-4 isn’t just another iteration; it’s a game-changer. With plug-ins and enhanced capabilities, this model can sift through mountains of data, analyze patterns, and even predict future trends out of your policy admin systems and your customer interactions. It’s like having a supercharged underwriter in your pocket, but one that doesn’t need coffee breaks or 2-litre bottle of Coke Zero.
Real-World Applications: Dynamic Premium Adjustments
Imagine a world where insurance premiums are not static figures cranked out of an Excel rater. Instead, quotes are based on dynamic variables and third-party data that adjust in real-time. With AI, this is not just a pipe dream but an imminent reality. The model can analyze real-time data — from weather patterns affecting home insurance to driving behaviour impacting auto insurance or the image of your neighbourhood from your Ring Camera— and adjust premiums accordingly. It’s systems thinking at its finest, where each component, be it the customer or the broader environment, is part of an interconnected graph.
Ethical Considerations: The Double-Edged Sword
Now, let’s not put on rose-colored glasses here. The integration of AI into insurance comes with its own set of ethical dilemmas. Algorithmic bias is a real concern. If not carefully designed, these AI systems could perpetuate existing inequalities. That’s why it’s crucial to approach this with a systems design engineering mindset. We need feedback loops that include diverse stakeholder input, ensuring that the AI serves everyone, not just a select few.
The Near Future: A Symphony of AI and Human Expertise
What does the near future hold? I foresee a hybrid model where AI and human expertise coalesce into a seamless partnership. AI will handle data analytics, risk assessment, and even customer service to some extent, while humans will oversee ethical considerations and complex decision-making. It’s like a well-conducted orchestra, where each instrument plays its part to create a harmonious melody.
The Sci-Fi Element: More Than Just Fiction
And for those of you who think this sounds like science fiction, remember that sci-fi is often a precursor to reality. Just as Jules Verne’s “20,000 Leagues Under the Sea” foreshadowed the invention of submarines, the AI capabilities we see in speculative fiction are fast becoming real-world applications. They serve as initial conditions in a complex adaptive system, setting the stage for multiple future states. Maybe you should read more science fiction?
Final Thoughts: Embrace the Change
The integration of AI into the insurance sector is not a matter of if but when. And the “when” is sooner than you think. As we navigate this complex landscape, let’s not lose sight of the ethical considerations and the human element. But let’s also not shy away from the immense potential that AI holds. It’s time to embrace the change and be part of the tectonic shift that’s about to reshape the insurance industry.
So, fasten your seat belts, folks. We’re in for an exhilarating rocket ride🚀.
You didn’t think you could get away from this article without a few Sci-Fi suggestions to inspire your Insurance AI thinking, did you?
Three Must-Read Science Fiction Books for Insurance Professionals
In the spirit of embracing the transformative power of AI and technology in the insurance sector, it’s essential to broaden our horizons and let our imaginations run wild. Science fiction serves as a fertile ground for exploring complex systems, ethical dilemmas, and future states — themes that are increasingly relevant to insurance professionals. Here are three science fiction books that not only entertain but also provoke thought on these critical issues:
1. “Neuromancer” by William Gibson
“Neuromancer” is a seminal work that introduced the concept of “cyberspace” long before the internet became a household name. It is the foundation of all things Cyberpunk. The book delves into themes of AI, hacking, and corporate espionage. Neuromancer serves as a cautionary tale about the ethical and societal implications of AI and data manipulation. It’s a must-read for anyone interested in cybersecurity insurance and the ethical considerations of AI in risk assessment.
2. “The Three-Body Problem” by Liu Cixin
This Hugo Award-winning novel explores the consequences of human contact with an alien civilization. It delves deep into game theory, astrophysics, and political intrigue. The book offers a unique perspective on risk assessment on a cosmic scale. It challenges readers to think about the “unknown unknowns,” a concept highly relevant to the insurance industry, especially in areas like catastrophe and poli-risk insurance.
3. “Snow Crash” by Neal Stephenson
“Snow Crash” explores the convergence of the digital and physical worlds. The book is set in a future America where everything is privatized, including law enforcement and national defence. The book is biased and misogynistic and does not do well to reflect today's values but it does provide a glimpse into a world where traditional government institutions have been replaced by privatized entities, raising questions about the role of insurance in a society where even basic services are commercialized.
These books serve as intellectual playgrounds where insurance professionals can explore the ethical, societal, and technological implications of their work. They offer a lens through which we can examine our roles and responsibilities in an increasingly complex and interconnected world. So go ahead, pick up one of these books and let your imagination soar. You’ll be better prepared for the tectonic shifts on the horizon in the insurance industry.
Rob Tyrie has been scribbling stuff for more than 50 years. He creates complex programs and partnerships and designs modern business architectures with new components ready to scale in the enterprise.
//genned with fine-tuning from corpus of posts on robtyrie.medium.com and chatgpt [all hallucinations are my own]
