Financial services quickly embraced new technology because its use in generating value was readily apparent to investors and customers. Gathering information in real-time and timing transactions based on the steady flow of information helps financial industry players and customers at same time. A big industry: AI for Insurers and Lawyers.
Impact for Insurers
The insurance business revolves around measuring and pricing risks. In short, it’s a business about caution. Perhaps that’s the reason why insurance companies have lagged other industries, such as banking, in adopting new technologies that offer more powerful analytics capabilities. But the insurance industry’s reluctance to adopt new technologies is breaking down. So-called insurtech is one of the industries drawing investor interest as startup companies test and market new software solutions, Coin Journal reported, citing a report from CB Insights and KPMG. Insurance companies are interested in using Internet-of-Things technologies to identify and mitigate risk, while also incorporating other technologies that identify fraud, improve efficiency, and cut costs.
In the insurance field, the name of the game is real time pricing. New technology can help insurance companies more accurately price policies to risk and while also cutting down on fraudulent claims that are costly to the industry. Daily Fintech notes that one of the more transformative developments in insurtech is the emergence of telematics. The capability to gather and transmit near-real time information produces even more data points from which an insurer can more precisely make their risk assessments. These bountiful data sources produce a tremendous amount of data from the home for home insurance, and from the car for property and casualty insurance.
Sensors and Interfaces
The collection and analysis of data is not limited to the home and the car. Wearable technology first found its place in people’s lives in fitness applications. But these technologies have matured to a point where they can be used for healthcare applications. The ability to monitor people and collect data of a person over a longer period of time yields measurable data that insurance companies can use to assessing health risks for life and health insurance, Daily Fintech says.
The industry’s adoption of new ways to measure and analyze data opens the door to the use of artificial intelligence. Insurance companies can implement AI in claims processing to detect fraudulent claims. The technology works by detecting patterns that humans would fail to see. Credit card companies have benefited from these analytics capabilities for year so it was only a matter of time before insurance companies added these capabilities to their toolbox. Insurance is still a business of around identifying and mitigating risks. But it’s a safe bet that insurtech will bring transformative change to the industry.
Impact for Lawyers
Lawyers are also moving into the world more rapidly than anyone imagined. Hybrid human-AI teams are combining the big data analysis and pattern recognition powers of AIs with the creative and empathetic working of the human brain. The legal profession and lawyers are supremely adaptable to these new hybrid decision-making methodologies. That is both a benefit and a significant drawback.
The law is alive, and constantly evolving. However, consider that it is alive like a small turtle in a glass aquarium. There are a prescribed number of steps before one has to turn back. The amount of space to move is limited. Lawyers can see out of the glass, but they remain prescribed by precedent and law. The glass of the aquarium can distort views.
Law is written, and then it begins to evolve through court decisions and legal arguments within the judiciary. Each new decision further explicates the law, but narrows it at the same time. For laws with many years of legal decisions, challenges, and opinions by courts, the tangled decision-making that results can be complex to the point of overwhelming. This is where the big data analysis capabilities of the AIs will shine. They can find patterns in the chaos, a yellow brick road out of the mess.
But not all yellow brick roads are safe, or just, or fair. The global understanding and empathy that humans bring must decide if the path out of the tangled web is the just one. This means that human beliefs, worldviews, and unconscious bias remains in play. Just depending on the decision of the AIs, however, does not preclude prejudice and unfair practices. AIs are programed by humans, with data sets that are not diverse or inclusive. They hold the unconscious bias of their makers (see also our blog post about “Do artificial networks make unbiased decisions?) .
At this point, we rely on a system of checks and balances to keep decision-making out of the hands of the few. While AIs can help find patterns, legal experts must remain the final step in decision-making. And those decisions must be scrutinized through the systems of opinion and appeal we currently use.
The changes that are coming to the insurance-, bank- and professional services industry are severe, and the digitization and connection of processes and devices will lead to different way of decision making and pricing due to AI for Insurers and Lawyers. Understanding the developments and possibilities of AI for Insurers and Lawyers are key to be a successful player in the changing markets. Contact us, now!