Artificial Intelligence or AI is the new Darth Vader. We can't see it, and absent translation, can't understand it. In home insurance alone,
However, regulators are quickly issuing limitations for the use AI. They sometimes broadly define the technology to restrict proven predictive modeling techniques that have been common for decades. Employees are fearing their jobs will not be relevant. Activists are claiming the algorithms are wrong too often or have a negative impacts on already challenged segments of our community even before such algorithms are built.
Why the negative reaction?
AI to improve customer experience, not to replace humans
We, in the industry, bring the critique on ourselves. Too often, when new data becomes available or new technologies show promise, we apply those technologies to improve our profit margins, or our pricing or our efficiency. At times, we fail to adopt the knowledge and technology in ways that improve the customer benefits of buying from us.
Take the process of filing a home insurance claim. Our policyholder's loss is often traumatic. While acknowledging the interest of not paying too much, insurers should avoid creating a frustrating, emotionally charged and vulnerable experience for homeowners to go through. We should not put accuracy and fraud prevention ahead of our duty to restore what's been lost and bring peace of mind to the homeowner.
The customer-first answer? Let AI handle the simple and repeatable tasks, while real people step in where judgement and personal touch are most important.
AI efficiency vs. human intuition
Four decades in the insurance industry have presented my carriers with plenty of technological revolutions. My first day involved lugging a green-screen, floppy-disced 40-pound Compaq around and learning Lotus 1-2-3 to use for pricing. We had rooms full of policy folders worked by drop-filing clerks.
Landline phones couldn't tell you who was calling or even take a message. A lot has changed, but AI might be the most dramatic change in the shortest time yet. Computing power and data sources that double in size annually now allow us to process seemingly infinite data at lightning speed. What used to take us hours now happens in seconds.
What do we do in this coming new world? Embrace it! We can now be critical thinkers that make wise decisions and design fantastic experiences. Someday, the idea that AI is a job killer, or a biased authority, will give way to the realization that it will make the quality of our life and work better. It well help us focus more on creativity and the human touch rather than on tasks involving rote repetition.
New technical tools can not be a "set it and forget it" proposition. We need human oversight to make sure decisions aren't just technically correct but also fair and reasonable.
Accuracy: AI's precision vs. human judgment
Artificial intelligence crunches more numbers more quickly and generates logical and objective conclusions more quickly than we humans can. Already, self-driving cars are available to prevent tens of thousands of accidents and deaths by using AI to improve risk recognition and mitigation.
However, we have hesitated to hand our roads over to AI. Why? Because the machine can't prevent all accidents, and the ones it allows sometimes are the result of a lack of human judgment and emotion. Don't believe those who say AI will someday have emotional sentience. It isn't true.
Let's speed up claims processing. Let's reduce mistakes. Let's evaluate trillions of bytes of data in an instant. We can do a better, faster, less burdensome job of concluding what the right risk-based price is for our coverage. We can prompt our AI tools to not only respond to data without bias, but perhaps to even reduce bias.
Sometimes we in the insurance industry do the equivalent of what airport designers do to passengers. Airports are making the arrival and departure experience more convenient for planes and airlines and vendors than for passengers. Tourists we draw to our city walk longer to get to ground transportation that is steadily further away from the most popular central cities and destinations. We move rental cars and public transit into massive, centralized facilities miles away from arrival and departure gates. These designs are efficient and convenient for vendors but a time-consuming hassle for the passenger.
If you want your customers to trust you, prioritize giving them a better policyholder experience using AI, rather than using the tool to make life easier or more profitable for the insurer. Don't make the mistake airports make. When the customer wins after buying your policy, you will win the customer.
The forgiveness factor: A human advantage
Insurance isn't just about numbers and algorithms. The experience of safety with a policy is as personal as the loss after an accident. Most customers still want a real person to understand what they're going through. People forgive people. If an AI service algorithm screws up, trust takes a hit. The customer starts to feel abused and controlled. If a human makes a mistake and is apologetic, customers are more likely to cut them some slack. The right balance — giving the customer the choice – using AI for the routine, humans for the personal — is the winning formula.
The future of insurance: A human-AI partnership
The promise and potential of AI is undeniable. However, we must not lose sight of what makes insurance unique: The commitment to giving customers financial security and being there for customers during their most challenging moments. It's not AI versus humans — it's AI with humans. Used the right way, AI makes us better, faster and more effective without losing the human touch.
The future of insurance isn't about replacing people with machines. It's about creating an environment where agents and technology work together to deliver what delights the customer, not just the insurer.
