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Innovation is one of the biggest buzz words in insurance right now. It means different things to different people. While one firm might see innovation as investment into new ideas coming out of the insurtech ecosystem, another might see it as using technology to make improvements to something they’ve always done.
Regardless of how insurance companies tackle innovation, there are two common themes that seem to penetrate each interpretation – data analytics and artificial intelligence (AI).
“I believe AI is going to be a huge factor in the insurance industry – it just has to be,” said Bret Ahnell, executive vice president at FM Global, a global risk management and insurance solutions provider for complex property risks. “I think the winning users of AI going forward will be defined by the companies that have good data. What are you going to do AI on if you don’t have good data?
“FM Global has been a data-driven company for decades. We know where to find good data, so now we’re looking at how to turn that data into powerful knowledge for our clients. I know a lot of companies talk about data, and many are focused on the question: ‘How can we get better at pricing our product?’ At FM Global, we’re really looking at our data with the question: ‘How can we help our clients make more informed decisions on where they should invest capital to improve their risk and avoid major disasters?’ That’s where we’ve focused a lot of our attention, and AI can help us with that.”
AI innovation runs the gamut from ‘act like a human’ to ‘think like a human’. Front-end robotics can be trained with AI to carry out repetitive tasks and bring efficiency gains. One of the more obvious examples of that in the property insurance space would be the use of drone technology in property inspections pre- and post-loss. Drones can be flown over a roof, they can collect granular data of up to 3cm per pixel, and they can feed that data back to an expert on the ground who can - as Ahnell put it - “turn that data into powerful knowledge.”
“The really big answer comes when you get into the more cognitive solutions [aka, when AI is trained to think like a human],” Ahnell told Insurance Business. “From an analyzation of risk perspective, when we go out to a location, we gather over 700 pieces of individual data at that location, and we do that at 65,000 locations around the world.
“If a machine can take all of that data, and it’s trained in what to look for and what data to feed back to the human, we’ll be able to start making really informed decisions much quicker. It’s more efficient having a machine sift through the data than asking a human to look through everything and find a needle in a haystack. Technology is our future, and AI is going to play a big part of that in our opinion.”
Ahnell has been with FM Global for 32 years. About five-years-ago, he moved up to corporate headquarters with the task of overseeing the company’s global strategy around innovation, AI, data analytics and more. When strategizing around something as expansive as innovation, it’s important to stay open-minded and set realistic short and long-term goals, he explained.
“What does a world look like where we don’t have boots on the ground doing field engineering? We have about 1,900 field engineers out there visiting 65,000 client locations around the world. What does the world look like if those field engineers get replaced by technology?” Ahnell commented. “It’s important to ask those types of questions and then say: ‘We might not be able to answer that question entirely in the next three years, but let’s start working towards that. What technology solutions can we identify that will put us in the right direction?’ Others might be doing it, but what we don’t want to have is somebody else coming up with a solution before we do. We need to be there first.”
