Finding the Sweet Spot Between Artificial Intelligence and Human Intelligence

Artificial Intelligence, Natural Language Processing - February 10 2021

AI or artificial intelligence has become a dominant buzzword in the commercial insurance industry over the past few years. So why are commercial insurance carriers swooning over artificial intelligence, machine learning, and natural language processing?

It's no surprise that AI technologies will have a dramatic impact on all aspects of the insurance industry, from distribution to underwriting, pricing, and claims. Advanced technologies and data enable commercial lines insurance carriers to achieve straight-through processing, expand their underwriting capacity, and bind policies in near real-time.

McKinsey predicts that in 2030 manual underwriting ceases to exist for most personal and small-business products across life, and property and casualty insurance. The process of underwriting is reduced to a few seconds as the majority of underwriting is automated and supported by a combination of machine and deep learning models built with the technology stack.

As many insurance companies embrace AI technologies, there is fear and uncertainty about how AI will transform traditional business processes like underwriting and the impact to the workplace. Many question the role of the “human” in the underwriting process and fear that AI will make them obsolete. However, the fact remains the role of the “human” or “skilled knowledge worker” in the underwriting process of complicated commercial risks is paramount due to the complexity of commercial lines especially large commercial business, and the vast number of products sold, the “human touch” is paramount when it comes to underwriting.

Let’s not forget insurance is a relationship-based business with people at the heart of every relationship across the entire insurance value chain. Relationships matter as the industry is predicated on helping others protect their most valuable assets.

We also need to remember that underwriting requires a comprehensive set of capabilities across hard and soft skills, qualitative judgements about future industry performance, and rigorous portfolio management – not to mention commercial insurance underwriting performance is also influenced by other factors such as business development activities and relationships with distribution partners to guarantee a steady stream of submissions.

There will always be a need for human intelligence at the other end of AI technology. According to leading research firm Gartner, AI is set to create more jobs than it will replace.

AI Will Digitally Enable Not Replace Underwriters

Profitable underwriting depends on continually improving the tools and technologies used to select and assess risks, manage portfolios, and optimize the underwriting process. With AI, underwriters can be freed up to focus more of their time on high-value, judgement focused initiatives such as strengthening existing relationships, developing profitable relationships, and advising brokers and policyholders, rather than spending their time on repetitive, time-consuming tasks like reading through mountains of submissions, rekeying and manipulating data, and manually applying business rules to submissions.

Commercial lines insurers are using AI to make smarter underwriting decisions, better manage risk, detect fraud, and deliver a better digital customer experience. By harnessing the power of AI to extract, interpret, contextually understand, and resolve hundreds of data points in seconds, underwriting teams have greater access to more data from a variety of sources, enabling them to make better informed data-driven decisions and accelerate the underwriting process.

AI-powered data extraction solutions automatically free data trapped in insurance documents like policies, binders, quotes, and submissions, contextually understand the data, and move it through the business process at speed. This allows underwriters to focus on more strategic judgment work rather than spending countless hours manually extracting data from submissions and rekeying data into multiple core insurance systems.

Using AI to automate the commercial insurance underwriting process is not about displacing underwriters, but rather empowering them to focus more on the art of judgment in their role. By automating labour-intensive, soul-sucking tasks like data entry, underwriters will be able to focus their time and talents on more strategic, meaningful and rewarding work.

Blending Human Judgment with AI

Machine learning and natural language processing solutions have the inherent ability to continuously learn and improve the accuracy of output over time with increasing exposure to data. As more and more data points are fed into the AI model, the machine’s predictions become more accurate over time. With AI there are continuous learning cycles that ensure the system gets smarter and more accurate over time. For AI-powered underwriting solutions, skilled knowledge workers play a critical role in teaching the machine by interacting with the system to submit corrections that are recorded and used in the next training cycle. We often refer to this as a “human in the loop.” 

“The important thing about AI is that continuous feedback loop that allows it to get better over time. So, you have to design your systems with that loop in mind. You have to think about the opportunity to give an expert end user the chance to interact with the system to get their job done, and to capture the additional feedback that that system needs to improve,” explains Colin Toal, Chief Technology Officer, Chisel AI.

For more insights on the crucial role of data in your AI strategy and how humans play a critical role in the training loop, listen to our full podcast episode featuring Colin Toal, Chief Technology Officer, Chisel AI.

Nurturing the Intersection of Technology and Culture

In another recent episode of the AI Wisdom – Talking Insurance Innovation podcast, we spoke with Megan Bock Zarnoch, Founder and CEO, Boundless Consulting Group about the intersection of technology and culture in commercial lines underwriting. Megan stresses that the key to blending human judgement with technologies like AI is including people and culture in your transformation journey. She explains that organizations really need to be able to have a framework and work backwards, so that you can create a strategic plan that then moves forward to deliver that vision. Ultimately you need to take a more outside-in view and think about that end goal. 

“Management teams need to talk about it, frame it up, in terms of how AI is going to enhance, how it will help the underwriter spend all their time building relationships, creating value for customers, proactively solving problems, and eliminate some of the busy work or the less value-add work they have been doing in the background,” explains Megan Bock Zarnoch, Founder and CEO, Boundless Consulting Group.

For more insights, listen to the full episode:

Embracing Digital Transformation

Insurance is a human business, and we will always need skilled underwriters exercising their judgment and specialized knowledge. According to Accenture, leading insurers that use intelligent automation will not only improve, but also completely reinvent the customer experience and achieve returns in excess of 10 times their investment in the technology.

Basically, intelligent automation supplements what underwriters are good at. The real value of AI is supporting humans in ways that increase their productivity, morale, and overall quality of life by freeing them from mind-numbing, high volume repetitive tasks that a computer can do better and faster. Deploying AI solutions should genuinely help underwriters work smart and enrich their lives. 

To learn how to you can harness the power of AI to digitally transform your underwriting processes, sign up for the SMA Insights to Solutions Commercial Lines Digital Underwriting virtual event.

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