The New Insurance Terminators?

The insurance industry will lose thousands of jobs - one in every five - to robots and automation, according to a new KPMG report.
More than half of the insurance decision makers surveyed predicted that 20% of jobs would be lost to automation and robots in next five years.

Sectors such as insurance are investing heavily in automation...

“Sectors such as insurance are investing heavily in automation, with over half of IT leaders in this sector reporting that they are either piloting or implementing AI or machine learning,” said Albert Ellis, chief executive of Harvey Nash, which partnered on the survey.

“Claims processing, policy issuance, administrative tasks – these are all clearly functions ripe for AI.”

The sheer power of robots was revealed this year when AXA announced three bots would save 18,000 work hours per year. Meanwhile, Zurich has piloted a chatbot called Zara to speed up claims.

According to Insurance Times, the survey findings comes as several major insurers this year have revealed plans for widespread cuts to staff.

Aviva leads the way, with staff revealing their shock at 1,800 jobs primed for cuts. At the same time, Allianz announced that 128 further jobs would be at risk.

Such news will come as no surprise to readers of Fifth Step’s blogs. We reported a couple of years ago that Fukoku Mutual Life Insurance was laying off employees in an insurance claims department and replacing them with an artificial intelligence (AI) system that can calculate insurance payouts.

30% Productivity Increase

The firm believed that it would increase productivity by 30% and save around 140m yen (£979,500 / $1.2m) a year in salaries after the 200m yen AI system was installed. Maintenance of the set-up was expected to cost about 15m yen annually.

Japan's Mainichi reported that the system is based on IBM Japan Ltd's Watson, which IBM calls a "cognitive technology that can think like a human".

As I have outlined before, we are currently in the early stages of a new industrial revolution, that I believe started around 2010. The signs are there for those who know where to look, and for those making or leading the transition, there are great opportunities.

In an i-Darwinian sense, it is not always the strongest that survive, it is those that can adapt to their environment. For the insurance industry, this is going to mean innovating and accepting change. Change isn’t going to happen quickly, or be achieved without the help and guidance from outside the organisation, but it will happen.

There are plenty of opportunities for the people and organisations that are able to adapt to their new environment, and equal dangers to those who ignore the changes.

The internet of things, machine learning and artificial intelligence will collect more data, process that data to deliver new insights, and magnify the capability and efficiency of global resources in a way that has never been possible before.

If your organisation doesn't have an AI or machine learning strategy yet, you are in danger of being left at a disadvantage or playing catch-up with a cyborg competitor. Fifth Step helps organisations prepare for and take advantage of the future today. Contact us now to start the discussion.