Japanese insurer to cut workforce due to job automation

Japanese insurer to cut workforce due to job automation | Insurance Business

Japanese insurer to cut workforce due to job automation
Fukoku Mutual Life Insurance, a firm based in Japan, is looking to reduce its payment assessment department’s workforce by close to 30%, as it introduces an artificial intelligence (AI) system in order to improve efficiency.
The insurer will introduce an AI system based on IBM Japan’s Watson, which IBM has touted as a cognitive technology with human-like thought patterns. The AI can analyze and interpret data, including text, images, audio, and video.
The AI will be used to read medical documents to collect information such as medical histories, length of hospital stays, and prescriptions needed to make insurance payouts. The system will also check customers’ cases and contracts to find any special coverage clauses to prevent any oversights.
Currently, the company’s payment assessment department had 131 employees as of March 2015. Human employees will continue to render the final decisions on payouts, but the introduction of the AI system is expected to make the process more efficient.
Fukoku Mutual has already begun reductions in staff, with 34 employees expected to be terminated by late March 2017. Around 50 workers are on expiring contracts, and the company is planning to let these expire without renewing them.
The AI system costs around ¥200 million (US$1.7 million) to install, and ¥15 million (US$128,000) annually to maintain. On the other hand, reducing the workforce by 34 employees will lead to ¥140 million (US$1.2 million) in savings each year.
Dai-ichi Life Insurance Co. is using a Watson system in a similar role, but there have not been any notable staff layoffs in the company due to the AI’s implementation. Japan Post Insurance Co. Also plans to install a Watson AI, and is set to start a trial run in March 2017.
While AI systems are improving efficiency and reducing human error in many industries, including insurance, some are worried about the effect automation could have on the job market, as increased reliance on technology has led to reshuffling or reduction of staff.

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