Better data analytics driven by machine learning and artificial intelligence will open up new revenue opportunities for insurers, says Google Cloud APAC Director of Financial Services Stuart Houston.
Unprofitable products – or areas where there was a lack of reliable price risk information – could become viable product lines, as the extra insights made possible by machine learning and artificial intelligence will open the door to “smaller or even micro” product lines, he says.
This will be especially the case in commercial insurance or protection of “customers’ valued assets, no matter how obscure”.
“This could mean insuring items of lesser value – which may have previously been unprofitable without new technologies – or offering insurance options to parts of developing countries where these have been inadequate or even non-existent.”
Houston says there is an opportunity to further use technology across the industry to make processes more efficient and “in turn facilitate a world of new revenue opportunities”. It would also allow for more personal insurance and a means of calculating risk that makes the policy profitable for insurance companies and affordable for customers.
“Looking ahead, further use of data to reinvent the way customers are protected and offer new products will separate leaders from the laggards,” he said. “It’s a win-win for insurance companies and customers.”
Google Cloud also says that machine learning and artificial intelligence will deepen a shift from the insurance industry’s current “recovery and recovery” model to a model of data prevention and prediction based on personal advice.
For example, new technology-based analysis methods can reveal that a roof is likely to leak using satellite imagery, calculate the probability of a motor vehicle accident in real time, and accurately predict flood and fire zones.
“Ultimately, it will see the role of insurance companies in our society change to be an advisory service,” Mr Houston said. “Stakeholders will increasingly rely on the advice of insurance companies to adapt their own business to meet … major challenges.”
