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Rise of Artificial Intelligence in Insurance
- 1. CNR Immersion Innovation andDisruption in Financial Services July 2015 www.pwc.com Rise of Artificial Intelligence in Insurance Property Innovation Summit 2017 Dr. Anand S. Rao Innovation Lead, PwC Data & Analytics May 3, 2017 Dallas, Texas us.pwc.com
- 2. 22 Contents 1. Rise ofArtificial Intelligence (AI) 2. AI in Insurance 3. Implications for Insurers PwC – Rise of Artificial Intelligence in Insurance
- 3. Rise of ArtificialIntelligence
- 4. 4 The growing sophisticationof AI and machine learning technologies are transforming our lives – both as a consumer and as an enterprise ACT: Artificial Intelligence is equaling or surpassing humans in a number of other tasks – playing games, driving cars, recommendations (movies, books, finance, research) etc. THINK: AI is helping us do tasks faster, better and cheaper – Automated Intelligence; helping us make better decisions – Augmented Intelligence, or even taking over what we do – Autonomous Intelligence SENSE: Artificial Intelligence is becoming ubiquitous intelligence with the ability to see, hear, speak, smell, feel, understand gestures, interface with your brain, and dream PwC – Rise of Artificial Intelligence in Insurance
- 5. 5 PwC – Riseof Artificial Intelligence in Insurance SENSE Artificial Intelligence is becoming ubiquitous intelligence with the ability to see, hear, speak, smell, feel, understand gestures, interface with your brain, and dream AI that can See AI that can Hear AI that can Speak AI that can Feel AI that can MoveAI that can Smell
- 6. 6 PwC – Riseof Artificial Intelligence in Insurance THINK Artificial Intelligence is moving from automated intelligence to augmented intelligence. As humans gain trust in AI systems, they might become autonomous intelligence • Automation of tasks • Human-in-the loop for decisions • Machines assist humans • Increased efficiencies • Reduced costs Man-Machine Intelligence Continuum Automated Intelligence Augmented Intelligence Autonomous Intelligence Degree of Advancement HighLow • Automation of decisions • Human-in-the loop for overriding or accepting decisions • Machines augment humans • Increased effectiveness • Increased revenues • Better experience • Control handed over from man to machine • No human-in-the-loop • Machines adapt to all situations • Business model disruption • New source of value
- 7. 7 PwC – Riseof Artificial Intelligence in Insurance ACT Artificial Intelligence is equaling or surpassing humans in a number of other activities – playing games, driving cars, recommendations (movies, books, finance, research) etc. Google’s autonomous car generates 1 GB of data per second to create a dynamic 3D map of its environment using machine learning Netflix combined man- machine intelligence by having teams of people watch and tag movies (36 page manual) to train the AI and create 76,897 micro-genres
- 8. 88 AI covers awide range of capabilities that spans the foundational, cognitive, system, and sensory layers Knowledge Representation Reasoning Planning & Scheduling Machine Learning Deep Learning COGNITIVE LAYER Robotic Process Automation Deep Question & Answering Machine Translation Collaborative Systems Adaptive Systems SYSTEM LAYER Statistics Econometrics Optimization Complexity Theory Computer Science Game Theory FOUNDATION LAYER What is Artificial Intelligence? Artificial Intelligence is defined as the theory and development of computer systems that sense, think, and act that when performed by humans will be considered as intelligent Machine Vision Natural Language Audio & Speech Navigation Visualization SENSORY LAYER AI Areas (Not Exhaustive) PwC – Rise of Artificial Intelligence in Insurance
- 9. Disruptions by InsurTechPlayers
- 10. 10 PwC – Riseof Artificial Intelligence in Insurance Disruptions in Property Insurance – Internet of Things, images, customer managed claims, robotic process automation, augmented intelligence 10
- 11. 1111 The “InsurTech” spacehas close to 1,000 start-ups in over 14 categories PwC – Rise of Artificial Intelligence in Insurance
- 12. 1212 At the intersectionof FinTech/InsurTech and AI there is an emerging group of close to 50 start-up companies PwC – Rise of Artificial Intelligence in Insurance
- 13. Artificial Intelligence inInsurance
- 14. 1414 Insurers carry outa huge number of activities and make countless decisions across the value chain that are being optimized or disrupted by AI PwC – Rise of Artificial Intelligence in Insurance Operations & DevelopmentOutbound Logistics Product Development Service & Support Underwriting & Operations Sales & Distribution Customers & Marketing Strategy & Growth Risk, Finance, Capital Claims Inbound Logistics How do we efficiently manage our capital and get better ROE? Director, Finance How can we engage with our customers to enhance their experience? Director, Marketing How can we grow our market share and which markets to enter, exit or expand? Director, Strategy How do we innovate and introduce new products and services? Director, Products How do we increase customer satisfaction and retain more customers? Director, Service How can we reach more customers and price our products to increase sales? Director, Sales How can we streamline underwriting and enhance efficiencies of our operations? Director, Underwriting, Operations How can we balance losses, claims experience and claims costs? Director, Claims
- 15. 1515 InsurTech companies arecombining AI with sensors, drones, and other technologies to provide services to underwriting and claims PwC – Rise of Artificial Intelligence in Insurance Underwriting & Loss Management Claims & Fraud Management
- 16. Artificial Intelligence inInsurance Underwriting & Loss Management
- 17. 17 PwC – Riseof Artificial Intelligence in Insurance Cape Analytics and NearMap provide insurers with accurate inspection level property data Pre-fill quotes with geo-spatial imagery Database of property attributes Data-driven underwriting Superior customer experience Source: Cape Analytics provider of structured property data for insures, signs strategic imagery partnerships with NearMap. Business Wire
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- 21. 2121 Deep learning withsatellite images to identify ‘neighbourhoods’ (business, residential, nature, infrastructure) PwC – Rise of Artificial Intelligence in Insurance The Path to Value... Cluster satellite images to identify similar looking neighbourhoods Overlay other demographic data to identify growth opportunities Make strategic decisions based on structured and unstructured data Gain competitive advantage with the use of alternative data sources Enhance with camera, drone and other sources of video and image data Project: Cluster satellite images to identify ‘neighbourhoods’
- 22. 22 • Remote datacapture and analysis Sophistication of preventive insurance models Crowdsourcing & Democratization of information Granular risk and/or Loss Quantification New sources of information can be combined to build comprehensive risk models where historical data is not any more an entry barrier for new players PwC – Rise of Artificial Intelligence in Insurance
- 23. 2323 Identification of objects,asset tracking, and risk assessment with drones PwC – Rise of Artificial Intelligence in Insurance Project: Capture and assess drone images from construction environment The Path to Value... OriginalCroppedImageModelOutput Extend image analysis to object detection and semantic segmentation Increase number of drone runs to collect image time-series Track volume of high value materials usage Reduce risks and enhance return on capital investment projects Add additional data types (e.g., thermal, etc.) Key: Background Trees Asphalt ConcreteCars Reinforcement
- 24. Artificial Intelligence inInsurance Claims & Fraud Management
- 25. 25 • Robotic processautomation of claims flow and triage Text document processing Process learning to streamline flow and reduce exceptions Significant cost and time reduction Robotic process automation is eliminating a number of routine and non-routine manual and cognitive tasks Source: https://www.slideshare.net/fwagman/openspan-claim-automation-service PwC – Rise of Artificial Intelligence in Insurance
- 26. 26 PwC – Riseof Artificial Intelligence in Insurance As the ability to generate insights from smart objects an sensors increases, companies are more readily able to collect, analyze and predict risk and reduce losses Remote data capture and analysis Sophistication of preventive insurance models Granular Risk and/or Loss Quantification Crowdsourcing & Democratization of information “Data analytics and Internet of Things (IoT) solution provider. It offers a Software-as-a- Solution (SaaS) platform to companies from different sectors including Insurers. The cloud-based platform allows companies to capture, collect, analyze, and take action on insights. Allows to integrated all kind of sensors including health, telematics, industrial sensors, etc. to provide deeper insights.” Source: Mnubo
- 27. 27 • Remote datacapture and analysis Sophistication of preventive insurance models Crowdsourcing & Democratization of information Granular risk and/or Loss Quantification By combining remote access to the risk and advanced methods to capture data, risk and claims assessments can be performed by the best talent from a the control room PwC – Rise of Artificial Intelligence in Insurance
- 28. 28 • Machine learningfor claims fraud Graph analysis for fraud assessment Claims leakage determination Claims loss prediction Claims Management Cockpit Machine learning and graph models are used to detect claims fraud, assess potential for litigation, and claims leakage determination http://www.skytree.net/2015/11/18/using-machine-learning-to-curb-insurance-claims-leakage/ PwC – Rise of Artificial Intelligence in Insurance
- 29. 2929 Text mining, NaturalLanguage Processing, and machine learning models are being used to extract structured data from claims documents PwC – Rise of Artificial Intelligence in Insurance Project: Extraction of legal and accounting entities from text documents The Path to Value... Extend text analysis with entity extraction and machine learning Create claims ontology by product line Better decisions regarding litigation and claims leakage Increased labor productivity & reduced claims expenses
- 30. AI Implications forInsurers
- 31. 3131 Four key areasof Artificial Intelligence have matured and are being increasingly adopted by vendors and enterprises • Supervised machine learning • Unsupervised machine learning • Convolutional neural nets, LSTM • Generative Adversarial Networks • Deep learning for text, voice, images, video • Robotic process automation • Cognitive/Intelligent process automation • Process mining and learning • Chatbots • Virtual assistants Artificial Intelligence • Information retrieval • Question & Answering systems • Language generation • Speech-to-text and text-to-speech • Machine translation • Agent-based modelling • Social simulation • Reinforcement learning • Management cockpits • Collaborative systems PwC – Rise of Artificial Intelligence in Insurance
- 32. 3232 Four Steps toestablishing AI within your Enterprise PwC – Rise of Artificial Intelligence in Insurance Step 1: Develop an AI Strategy that is aligned with your overall business vision and objectives. Step 2: Develop an AI capability across the enterprise in the relevant assisted, augmented and autonomous intelligence. Step 3: Institutionalize the portfolio of successful AI capabilities by embedding analytics in core processes, adopting cloud and open-source platforms Step 4: Ensure appropriate governance of all forms of intelligence by educating and changing customer and employee perception of AI Business-Aligned AI Strategy AI capability model Institutionalizing AI AI Governance & Change Step 1 Step 2 Step 3 Step 4
- 33. 3333 Strategic questions toconsider PwC – Rise of Artificial Intelligence in Insurance How can you reinvent your business model by exploiting our unique position and accelerating automation and augmentation trends? What are some of the automation and augmentation opportunities provided by Artificial Intelligence? Where do we start and how do we leverage internal capabilities and external InsurTech partners? How do you build an AI advantage using more data for the machine learning to improve faster? 1 2 3 4
- 34. 34 © 2017 PwC.All rights reserved. PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see www.pwc.com/structure for further details. This content is general information purposes only, and should not be used as a substitute for consultation with professional advisors. Dr. Anand S. Rao Innovation Lead, PwC Data & Analytics +1 617-633-8354 anand.s.rao@pwc.com Thank you! 34