By Professor Andy Pardoe / AI Expert & Nuon AI Adviser
This article is an exclusive excerpt from our NEW AI Adoption Playbook, which explores the opportunities, risks and rewards AI presents to the insurance industry.
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Long before tools like Chat GPT broke into the mainstream, AI was the domain only of those, like me, who were deeply entrenched in the tech industry. Now, I am seeing unprecedented demand for AI support across multiple industries and sectors at Wisdom Works, my technology consultancy specialising in AI adoption.
The noise around AI is building, with insurtechs increasingly seeking to implement new technologies to help them gain ground in an increasingly competitive space.
However, my first instinct when talking to organisations is to encourage them to proceed with care in their exploration of AI products. As the wave of enthusiasm around AI builds, so too do the number of solutions available on the market – but AI is not in itself a silver bullet for business transformation, and not all AI products are equal.
With AI becoming the latest buzzword, many products and services will falsely claim to be AI-powered. Cybernews calls this practice ‘AI-washing’, citing multiple examples of startups making unsubstantiated claims about their use of AI. According to a study of 2,830 European startups by consultancy MMC Ventures, 40% of companies describing themselves as ‘AI startups’ used virtually no AI at all.
There are a number of ways to spot a genuine AI product. Look for case studies and use cases offering insights into data, performance and the models or algorithms used, and detailed information about the branch of AI or machine learning the product is using. You can also look into the team behind the product’s credentials, to identify their expertise and background in AI or related fields.
One of the reasons I was attracted to Nuon AI is that this is a genuine application of AI, created by a team with decades of experience in tech, insurance and software development (over 100 combined years I’m told!).
When working its way into an industry, AI tends to go through specific phases. Phase 1 is automation – largely working alongside the human element to speed it up – to reduce costs. Phase 2 directly works on the product or service itself. Nuon AI is a Phase 2 technology because it allows underwriters to adjust pricing in real-time, far quicker than they could achieve by making manual adjustments, with the end result of maximising revenue.
Nuon AI’s approach is interesting because it takes what insurers are already doing, and uses AI to allow them to do it faster and with more accuracy. For example, an insurer who promotes their products on an aggregator, such as Compare The Market, can use Nuon AI to rapidly adjust their prices in response to unexpected movements in the market. The result is that they can either regain market share when it dips, or they can test higher prices to make sure they’re not leaving money on the table.
It’s innovative, but it’s based on a proven approach to AI, so risk is mitigated. Nuon AI is essentially allowing insurers to improve the results of what they’re already doing, rather than completely upend their products.
AI offers incredible potential, and by proceeding with care, insurers can ensure they harness that potential effectively. I advise my clients to approach their exploration into AI products in the same way they would any other strategic initiative.
While it is easy to get swept away by the hype of the promise of new, shiny tools, fundamentally that must be stripped away to enable a clear view of the use cases, the providers, and the impact through both a business and technical lens. Following a structured process ensures the problem to be solved is clearly defined, the business case is solid, and the right solution is ultimately selected.
The insurance industry may have a reputation as slow-moving and behind the curve when it comes to innovation, but the growth in AI tools represents a truly exciting opportunity for insurers. I will be watching with interest to see how the power of AI is utilised correctly to drive efficiency, profitability and, ultimately, competitive advantage by the organisations smart enough to take the leap.
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Nuon AI adviser Professor Andy Pardoe is a world leader on the subject of AI.
Professor Pardoe is listed by IBM Watson as one of the Top 30 AI Influencers globally. He holds three degrees from Warwick University (BEng, PhD, MBA), an Honorary Professorship and is Chair of the Deep Tech Innovation Centre.
For more information, you can view his website at pardoe.ai