AI Hits The Insurance Industry

by Nick Teulon

We are on the verge of a revolution in technology, unlike anything we’ve seen before.

Machine learning and artificial intelligence are about to change the way we live. Any cognitive task a human can perform, a machine can do faster.

Intelligent machines are outperforming humans in a growing number of tasks, which will not only change the way we interact with AI and each other, but will transform the way we do business – and the way we see insurance.

Y Combinator, the world’s most successful startup incubator (its alumni include Airbnb, Dropbox and Stripe), recently announced its intention to invest heavily in artificial intelligence:

 

Some think the excitement around Artificial Intelligence is over-hyped. They might be right. But if they’re wrong, we’re on the precipice of something really big. We can’t afford to ignore what might be the biggest technological leap since the Internet.

David Gross - Y Combinator

Bring insurance into the mix, and it seems clear that technological advancements in chatbots, machine learning and artificial intelligence has finally created the opportunity to redesign the industry from the ground up.

Under the current model, insurance is extremely ineffective. A huge chunk of consumer premiums goes towards overheads that include marketing, actuarial, commissions, onboarding, customer service, claims processing and fraud, before finally addressing the main objective of insurance – risk and volatility.

By removing humans from the system and developing new business models made available through mobile apps, social networks and artificial intelligence, a number of insurance startups attacking the $4.8 trillion global market have managed to reduce premiums by over 40 per cent. Here’s a snapshot: 

Insurtech startups utilising machine learning, artificial intelligence and chatbots:

Cover Genius

Founded in 2013, Sydney
API + Machine Learning

Cover Genius applies patent-pending technology and multivariate testing to optimise the profitability of insurance as an ancillary revenue line.

By partnering with underwriters, Cover Genius optimise their price, front-end and policy in over 70 countries and across 20 languages, utilising data science and machine learning technology.

www.covergenius.biz

Lemonade

Founded in 2015, New York
Mobile Apps + Artificial Intelligence + Chat bots + Behavioural Economics

Lemonade Insurance Company is a licensed insurance carrier, offering homeowners and renters insurance powered by artificial intelligence and behavioral economics. By replacing brokers and bureaucracy with bots and machine learning, Lemonade promises zero paperwork and instant everything.

Within minutes, a dynamically priced insurance policy can be generated by ‘Maya’, Lemonade’s own proprietary AI bot.

In December 2016, Lemonade claims bot ‘Jim’ closed a claim within three seconds: not only reviewing but cross-referencing the claim with its policy and running 18 anti-fraud algorithms before approving it. Before the three seconds were up, Jim also sent wiring instructions to the bank before informing the customer the claim was closed.

Lemonade claims it can reduce premiums by up to 80 per cent in certain cases.

www.lemonade.com

Brolly

Founded in 2015, London
Mobile App + Artificial Intelligence

Brolly is the UK's first artificially intelligent insurance advisory service. Using web and mobile apps, customers are delivered relevant insights to help them make informed decisions about their insurance.

With Brolly, customers can better understand whether they're over- or under-insured, whether they have missing or duplicate cover, and where they can get a better price for the cover they need.

www.heybrolly.com

HAVE A PROJECT?

Get in Touch