Republish from the special edition of Nextdeal (Issue 560)

Xenophon Liapakis, Chief Technology & Information Officer, INTERSALONICA

Artificial Intelligence (AI) is at the forefront of the digital transformation, across all sectors of the global economy, with its level of maturity and implementation varying by country and sector, but Insurance is one of the sectors that are heavily investing in this sector, in the last decade.

Dr. Xenophon Liapakis

The Challenges

The insurance industry, and not only, in its effort to exploit the opportunities offered by the rapidly evolving Artificial Intelligence in recent years, has to face a number of significant challenges. Challenges mainly related to culture, managing fear and resistance, finding tech talents, enhancing security and establishing the right governance model.

Culture & Resistance: To successfully integrate Artificial Intelligence (AI) into an organization often requires significant cultural change. AI is not just a matter of adopting new technologies, but is about changing mindset, and way of working at all levels of the organization. It requires the organization to manage the fear and resistance that normally come from the human factor, to encourage curiosity, experimentation and innovation, learning through mistakes and failures, and the organization's adaptability in a constantly changing environment.

Tech shortage: Insurance organizations are struggling to meet the needs of finding staff with skills in artificial intelligence, prompting engineering, data algorithms, machine learning, etc., in an environment where the lack of resources having expertise and knowledge in these areas and the new needs created are growing exponentially.

Explainable AI: As AI becomes more and more complex, the ability to explain the "why", i.e. how it makes decisions, is crucial because providing the necessary transparency helps build trust with customers and regulators.

Shadow AI: The speed at which AI is evolving is outpacing traditional governance models applied in IT, increasing the risk of managing to what we all know by the term Shadow IT. Organizations are forced to upgrade their governance model as quickly as possible, developing new strategies and processes to adapt, while ensuring the data protection they process using AI.

Trends & Achievements

The insurance industry has leveraged and introduced, in recent years, a number of digital projects and services that affect important areas of its daily operations, many of which are available to its partners, allowing them to be more productive, providing 24x7 advanced digital services, enhancing their customer satisfaction and experience, such as:

Process Automations: By integrating AI with robotics (RPAs), repetitive tasks are automated, freeing up time for employees to focus on more complex tasks. A typical example is the multiple requests that come daily via email and beyond, with various

attachments, which, unlike in the past, are automatically opened, categorized, converted into text, with simultaneous sentiment analysis, and completed with the least possible human intervention.

Cyber Security: Investment in security systems using AI is growing significantly, protecting organizations from the much more frequent and sophisticated attacks they face, managing them in real time.

Fraud Detection: By analyzing large volumes of data at high speed, AI can detect anomalies and patterns that may indicate fraud, which is difficult for humans to do on such a large scale, helping insurance companies to reduce their potential losses.

Customer Experience: Developing and deploying AI applications, such as virtual assistants, providing customers and partners with 24x7 instant and personalized service, increasing their satisfaction while reducing pressure on their call centers. Virtual assistants are evolving to have a more human-like presence, encompassing both form and voice (Avatar & NLP technologies) where they listen to the questions and answer the customer/partner, incorporating personalized speech2text, text2speech and avatar personalized technologies, with real time sentiment analysis capabilities leading to a more efficient, more empathetic service to dissatisfied customers/partners.

Scoring Process: In HR, comparing the CVs against the profile of the resources they are looking for, in procurement comparing the offers against the corresponding RFP, in regulatory compliance doing a gap analysis of where they are in relation to the corresponding regulatory framework etc., defining the evaluation criteria and creating a comparative scoring table for all of the above, giving the ability to make decisions much faster and safer.

Personalized Services: By analyzing data through artificial intelligence and big data analytics, insurance companies can create personalized services, policies and programs. Plus, insurance coverages are tailored to each customer's needs, behavior and risk profile.

Training: AI-based training platforms that help intermediaries, using virtual assistants, to stay up to date on insurance issues, new products, regulatory changes and best practices, become more productive and efficient.

Product Development: Usage-Based Insurance (UBI) programs, particularly in the areas of motor and health insurance, meet the most visible changes. Customers are paying based on “healthy” lifestyle and how they drive, thanks to the use of IoT devices that track their behavior.

Claims Management: Today, many insurance organizations manage claims remotely, making Accident Care, repair shops communication and pre-insurance check via steaming, while with use of Artificial Intelligence the cost estimation is immediate by processing the photos of the accident.

Underwriting: With AI's ability to analyze huge volumes of data from various sources [e.g., their own database, public open data, even sensor data (IoT), risk assessment becomes faster and more efficient].

Software Development: Developers use AI which has already the ability to develop code in various programming languages, detect and fix bugs, suggest optimizations, create test scripts, etc. However, human oversight and final approval of a senior architect is necessary, especially in cases where complex design decisions or deeper understanding of business are required.

The Future

AI is undoubtedly the game changer in the insurance industry globally. Its ongoing, rapid evolution promises to bring even greater changes in the coming years, creating new opportunities and challenges for insurance companies, their partners and customers.

In addition, it is vital to ensure that it is used in an ethical and responsible manner, respecting the privacy of customers and avoiding discrimination. That’s why we see the European Union emphasizing regulatory compliance, regulations and increased transparency to avoid bad practices like what we experienced regarding the use of our personal data until the GDPR was enacted.

Read below the article from the special edition of Nextdeal (Issue 560) in electronic format, page 37 (click bottom right to enlarge)