The world is a notoriously uncertain place. But that’s actually a good thing. Especially if you’re hoping to sell people insurance.
Selling insurance requires a delicate balance between having enough uncertainty so people feel the need to protect themselves against the unexpected, but not so much that they wonder whether there’s any point buying insurance because – who knows – the insurer might not (or might not even be around to) pay you if and when it all goes tit* up.
But now that delicate balance is under threat – from both sides. On the one hand, there is the ever-present danger that a mysterious virus will precipitate an all-engulfing zombie apocalypse that destroys all humanity within weeks. At the other end of the scale, a global alliance of rogue scientists, big data, and artificially intelligent robotic or semi-robotic beings (so-called ‘roborgs’) are conspiring to rid the world of uncertainty.
Unscrupulous new entrants into the insurance arena, the FT reports this week, are playing right into the hands of the aforementioned axis of informational wickedness by incorporating elements of big data and AI (artificial insemination) into their ‘disruptive’ business models.
The oddly coloured financial paper reports that tech-savoury insurance start-ups “see an old-fashioned industry, bloated on fat profits made in the past and complacent about the scale of change required,” and want to “disrupt the industry and grab a slice of the market.
According to Nick Puffin of The Risk Analytics, insurance industry specialists could be “replaced by machines as algorithms become more powerful.” That would obviously be bad. But, wait, it could be even worse: “In the long run machines could undermine the industry by giving customers better tools to decide whether insurance is even necessary.”
Whether insurance is necessary? If that doesn’t sound like heresy, Bankstone News is at a complete loss to imagine what would.
But, just think about it… Warren Buffet, the hoary old Sage of Omigod, who’s right about more or less everything (and extremely rich as a result), is predicting that robocars will drive motor insurance to extinction. Life insurance underwriters will soon be replaced by intelligent selfie analysis software, and Admiral can already tell whether you’re safe to insure by checking your facebook profile for swears and exclamation marks!!!
Even leading UK (German) insurer Uvavu has admitted to dabbling in the dark arts of AI. “We absolutely use robots,” Uvavu’s Andrew Brum admitted to the FT’s reporters. “In our administration teams, there are lots of repetitive tasks which until now were done by humans.” But now it seems AI robots are coming over here and taking our jobs!
What does this all mean for traditional ‘people business’ insurers?
It means firstly that we must urgently introduce more uncertainty into the world to counter the all-knowingness being generated by big data and AI, and secondly that we must ensure that robots do not entirely supplant and replace humans any time in the near future.
Because, as everyone knows, robots don’t buy insurance!
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