AI reception in the Asian insurance landscape

How are companies responding to this massive technological breakthrough?

AI reception in the Asian insurance landscape


By Kenneth Araullo

Regardless of whether you are for or against it, one thing is certain: artificial intelligence is here, and it is here to stay.

The emerging technology has been making waves in the past year or so as it seemingly redefined work and processes for various industries overnight. While there have been those who argue that its adoption will lead to a revolution in the way people work, there have been those who are vocally against it, citing ethical issues and the looming fear that this technology is just another step for companies planning to supplant the human workforce.

A segment that is still viewed as emerging could offer up the right conditions for AI to make its mark as a groundbreaking innovation, and the topic has not escaped the Asian insurance industry, a sector that is still considered underdeveloped compared to its American or European peers.

Underwriting solutions

The region has been selected as the inaugural market for Munich Re’s AI-powered underwriting solution.

“We’ve significantly uplifted underwriting automation (straight-through processing) for multinationals (MNCs) through our next-generation AI-augmented underwriting solution,” Munich Re APAC, Middle East, and Africa L&H chief analytics officer Lee Sarkin said in conversation with IB Asia in June. “This was well-timed since it addressed the priorities of Asian insurers whose digital strategies focus on improving the customer experience via data, AI, and tech.”

“To this end, we are confident that AI and automated solutions will continue to rank high on the agenda for insurers and offer a range of benefits that improve the customer experience, operational efficiency, risk selection, and ultimately sales and profitability,” he said.

Beyond business efficiency

AI in the insurance industry cuts through to another very important aspect – data. AIA Singapore chief customer and digital officer Melita Teo explained that the company is already leveraging the tech for the analysis of consumer segments, driving lead generation, and automating targeted marketing.

“As early adopters of AI technologies, we have successfully leveraged AI and machine learning to automatically assess claims,” Teo said in a recent IB Asia interview.

AIA’s end-to-end turnaround time from claims processing has been trimmed down to one to four working days, while the industry average is two weeks minimum, according to Teo.

“Applying AI in the claims assessment process also facilitates the detection of suspicious and unusual claims in the early stages and identifies possibly fraudulent claims,” she said. “In the long run, this helps to keep healthcare financing sustainable for customers as we are able to moderate the rate of health insurance premium increases, while maintaining a healthy claims reserve pool.”

Teo also expected a “seismic impact” from AI by 2030 across all aspects of the insurance value chain, although the words of others imply that it will happen much earlier – if it did not happen already.

ACORD president and CEO Bill Pieroni noted that as the industry faces “an uneven future,” AI is already extremely important and there is to some extent an understanding gap.

“I think there's lots of confusion out there around its intelligence, and if it's going to replace people. Simply put, it’s going to augment people. It's going to make people better, faster, and have a bigger impact for customers, for shareholders, for the carriers. It's going to be transformative,” Pieroni said in an interview with IB’s Corporate Risk.

“Is it going to change work and roles? Sure, you can count on it, but I'm not scared of it,” Pieroni remarked. “It's very real, but while it's transformative, it's not some frightening technology from science fiction. It's just math.”

Cautious, tepid views

While the reception around AI has been largely positive, some have taken a more cautious, even somewhat tepid approach to the technology. For insurtech Surer co-founder Gordon Tay, it is important is to cut through the hype and noise – in other words, avoiding the pit trap of “buzzwords.”

“We think that the potential of AI in insurance is huge – immense, even,” Tay said in conversation with IB Asia. “However, we also believe that this tech, like many others, should be leveraged for the right purposes, and should only be implemented when a particular insurtech company or insurer is able to use it with good impact.”

“Once again, it should also be not just another buzzword to be tossed around. ‘Oh, now I’m using AI,’ but it’s actually just a chatbot. Sometimes, the angling of the word ‘AI’ becomes a bit muddy; some firms create a chatbot which just asks questions you see on a form, and they just call it AI. It should go deeper than that,” he said.

Given their place in tech, it is easy to see how insurtechs can be cautiously optimistic about AI. That said, there are those – like Swiss Re Reinsurance Solutions CEO Russell Higginbotham – who believe that focusing too much on the value that AI can offer also takes away from other important aspects that are much closer and more readily available.

“I think that there’s clearly a lot of talk around AI at the moment, and it clearly has a lot of potential in the future. That said, it’s probably a little bit overhyped as well,” Higginbotham said in an interview with IB’s Corporate Risk. “I see that some of the AI capabilities, they can take away some of the more menial tasks and give people more time, but I think for insurance there’s so much that we can do that’s closer to home and nearer at hand that’s going to be more impactful.”

“At the end of the day, what we all want to achieve is to have better value, well-structured policies in the hands of more people,” he said. “That’s ultimately what we’re trying to do in insurance; closing that protection gap is always the challenge. There’s more that we can do around that.”

Ethics above all

Despite the differences in views and opinions, a common theme shared by insurers in the region regarding AI is the ethics attached to it. With environmental, social, and governance (ESG) initiatives in full swing across the industry, “guardrails” for AI is one of the more important considerations across all firms looking to leverage the technology’s expertise.

“Cigna has recently set up an AI ethics group that’s not specifically for Singapore. One of the three things that we're having a look at is making sure that as we start to look at AI, we need to make sure that we've got ethics which are transparent, and that we're accountable and people are kept safe,” Cigna Healthcare Singapore COO Steve Nash said in an interview with IB Asia earlier in July.

“It also includes how we are holding ourselves accountable and making sure we're not crossing any boundaries from an AI perspective and from a safety perspective,” Nash said. “It also means ensuring that we are maintaining a human-centred approach.

“We're not looking at doing anything [that] doesn't have human control when it comes to AI.”

Emerging technology also offers a relatively unknown risk avenue, an important aspect to consider given that insurers are in the business of risk. Sun Life Asia president Ingrid Johnson noted that above efficiency, customers should be shielded from the possible risks that comes with AI technologies.

“What we are doing goes more in the sense that we need to do it in a way that isn't part of our broader network, because number one for us is protecting – from a cyber perspective – our client data, the privacy of the data, and the resiliency and robustness of our technology. So, these emergent technologies certainly have the opportunity to be used, and that's things that we're exploring,” Johnson said in an IB Asia interview.

“What's very clear is we still need to bring the human interpretation because it's not necessarily 100% correct, and it can't feel emotion. Those are elements that we are mindful that it can't do,” she said.

What are your thoughts on this story? Please feel free to share your comments below.

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!