Lost jobs but happier customers — insurance embraces AI and IoT

Lost jobs but happier customers — insurance embraces AI and IoT

Lost jobs but happier customers -- insurance embraces AI and IoT
Lost jobs but happier customers -- insurance embraces AI and IoT

An insurance company in Japan replaced 34 employees with AI, while a European insurer has developed a skill for Amazon’s Echo. What awaits insurers in this brave new world of IoT?

Japanese insurance firm, Fukoku Mutual Life Insurance, is making 34 employees redundant. The unlucky staff are being replaced by IBM Watson’s Explorer artificial intelligence (AI) system in a bid to increase productivity by 30 percent and see a return on investment (ROI) within two years.

To install the system it will cost Fukoku Mutual 200m yen ($1.7m), plus a yearly upkeep cost of 15m yen ($130,000). Fukoku Mutual, however, believes the ROI will come in the form of 140m yen ($1.2m) in savings.

A white collar threat

IBM Watson’s Explorer has cognitive capabilities that enables it to analyze and interpret data, quickly. IBM Watson claims it can “think like a human”, but for this purpose it is to be used to read tens of thousands of medical certificates and factor in length of stays, medical histories and surgical procedures needed, according to the Guardian.

This is not the first instance of robots taking human jobs. Notably, Foxconn replaced 60,000 factory workers in China in May last year. But that was in the manufacturing sector, where manual labor has long been under threat from the rise of the machines, not the white collar realm of insurance.

What’s more, it seems aspects of other white collar jobs are no longer safe. The Japanese government is also said to be considering introducing AI machines to help civil servants draft answers for ministers during cabinet meetings and parliamentary sessions, a task which is said to take hours, a further sign humans need different skills for the digital world.

Greater responsibility

These are not the only indications that robots are being allowed greater responsibility in the insurance market. British insurance giant, Aviva, has developed a skill for the Amazon Echo smart home assistant – a voice-powered device that provides users with help at home – allowing it Aviva customers’ questions about insurance.

It’s a basic functionality, but a clear indication that insurers are trying to get closer to the customer and improve on the typically dry insurance experience.

“We are the first UK insurer to deliver a Skill for Alexa,” said Kevin McQuillan, Aviva’s digital customer experience director.

“Our first foray into this world is pretty straightforward but in the future you can expect this to be much more closely linked to your own policies. It is a new way for our customers to interact with us at Aviva.”

The firm apparently believes that voice will be a game-changer for how it interacts with its customers in future.

Related: Researchers think we’ll soon be confiding in AI chatbots

Impact on insurance

So, how can we assess the current impact of IoT technology on the insurance market?

Well, while long term cost-savings should be realized due to reduced time spent calculating Fukoku Mutual’s payouts, the money will not be paid out until they have been approved by a member of staff, implying the firm is not quite comfortable giving a robot full control. Yet.

And, actually, AI machines in government would not completely replace civil servants. That, at least, is some way off. Perhaps these civil servants will welcome not having to do such time-consuming tasks in future?

Robert van der Veur, project manager IoT, BI & Analytics at Sogeti, told Internet of Business that the time when machines replace humans en masse is still far removed from reality.

“A future in which human workers are replaced by cognitive machines is maybe becoming a reality in the next decades,” he said. “The widespread fear that these cognitive machines will be used to automate in ways that creates mass unemployment is understandable. But for the current white collar worker it is not yet a reality.

“The current cognitive machines are built for a single task or process. Cognitive machines are not yet anywhere near real “artificial intelligence”. It remains a specialized tool, not a panacea.”