Artificial intelligence (AI) has enormous potential to disrupt across the data- and process-heavy insurance value chain.
The growth of AI startups and adoption of (AI) by Australian insurers began in earnest over the last two years.
The approach taken so far is one of collaboration rather than direct competition between incumbents and disruptors.
In 2017, the Australian insurance market was worth A$100bn in premiums and A$7.2bn in profits. Australians spent over A$100bn on insurance premiums in 2017, making the insurance market a huge target for the tech industry.
Typically, there is the greatest scope for AI to achieve higher performance in areas that are data or people-heavy or those involving relatively repetitive tasks and rule application. This creates opportunities for insight to be extracted and processes/interactions to be automated. Thus, in insurance, major use cases for AI include:
Lowering operating costs
Improving customer experience across the customer journey
Delivering strategic business insights about internal operations, risk pricing, fraud detection and claims assessment
Shifting policy holder risk profiles
Allowing dynamic pricing of risk