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For 2018, SMA predicted that AI was going to be the dominant headline. And in fact, that was the case. Virtually every entity that has a place in the insurance industry found a discussion thread around AI. However, 2019 will be the year that AI steps out of the headlines and into business problem resolution. Most specifically, “prevention and mitigation” will become an insurance business standard enabled by AI and critically focused on managing two of the most onerous societal and insurance problems: cyber and natural catastrophes. The insurance industry is highly capable when it comes to restoration, but for both cyber and catastrophes, it will be imperative to place just as much effort on prevention and mitigation. Because of risk complexity, AI coupled with emerging data sources are poised to change business outcomes. In 2019, SMA believes the following will be elemental for all insurers:
- AI driven insight, at scale for pricing, product, and underwriting, will be provided to address cyber exposure for small and medium businesses that are the most financially exposed and financially sensitive.
- Prevention and mitigation for both cyber and catastrophe management will be facilitated at an individual level as traditional risk elements are augmented by granular data from non-traditional sources.
- AI, when combined with geospatial data, will change the claims settlement process so that it is close to real-time following an event and will not require an on-site inspection to commence compensation.
Make no mistake, AI has applicability across a wide range of insurance business problems. However, given the economic impact on individuals, commerce, and the insurance industry related to cyber and catastrophe events, utilizing the many forms of AI to unlock information and processes – restoration, prevention, and mitigation outcomes – takes the industry in new directions. It will be a journey to reach goals related to cyber and catastrophes. Events will not cease, but over time, with growing AI and data competencies, insurers will be able to bring strong positive influences to both cyber and catastrophic events which will change the value of insurance to society in general. The journey starts in 2019 and will be the beginning of enterprise corporate business models highly focused on prevention and mitigation.
The Future Envisioned: Building a Platform for Digital Insurance 2.0