The industrial revolution that started around the 16th century marked the beginning of a new era. Its contribution to the human race was so drastic that in the words of historian Ian Morris – “It made a mockery of all that had come before.” Machines took over manual labor and increased the industrial productivity manifolds. For two to three centuries the world witnessed the evolution of the industrial age, which shaped our realm like it is today, into a global village. But over the past two decades, things have been changing at a rapid pace. Conches have been blown to announce the aeon of technological innovations, an era shaped by artificial intelligence and connected devices, marking the advent of the fourth industrial revolution. Industries across sectors are witnessing changing business models that leverage these technologies helping them to be more efficient and reach out to geographies that were previously untapped.
Traditionally known as a silent sector, this technological revolution is giving the insurance industry a total makeover. The industry is leveraging on latest technologies, to reach out to more and more customers with new, innovative and smart insurance solutions. The use of big data analyses and IoT has set base and insurers are centering their products around these to give the customers a well-rounded and connected interface. The proliferation of smart phones and internet connectivity has led them to reach out to previously inaccessible geographies, virtually, without having to set brick and mortar offices. The sector is present on almost all social media platforms, creating customer awareness and redressing their grievances through these platforms, almost instantly. While all this paints a beautiful picture, a dystopian view exists with many pointing towards the loss of jobs at hand as droids take over human labor. This is well supplemented with news-pieces like the announcement of a Japanese insurer that it will lay off more than 30 employees and replace them with an artificial intelligence system. This system has been described as having “cognitive technology that can think like a human” clearly highlighting the fact that machines may now replace humans in not just doing menial mechanical tasks but also undertake complex, sophisticated work and possibly replace even several ‘white collar’ workers.
When we think about the issue at hand, there are three thought processes that emerge.
A bit too futuristic
The first one being that these evolutions are a bit too futuristic for the Indian Insurance Industry. While AI and connected ecosystems will majorly cater to the urban crowds, with extremely poor levels of non-life insurance penetration at 0.8% percent, the benefits of insurance are yet to reach the untapped masses. Therefore, the industry has the potential to consistently employ lacs of people, both directly and indirectly, every year to spread insurance to the vast interiors of the country. It has also personally been my dream to give job opportunities to at least a million people. The entire insurance operations from policy issuance to claims settlement will be carried out through the tab, sans any physical documentation. Therefore, we are rather at a “phygital” stage – at the cusp of a complete tech revolution, where insurers can add value by enhancing the entire insurance experience for a customer by augmenting digital experiences with it.
Customers prefer Human touch to an AI
Secondly, insurance is a business of settling claims. And it is the time when customers need a human touch rather than an artificial interaction with a bot. Almost 58% millennials prefer dealing with humans to answer their questions, 73% prefer human interactions to resolve their service issues and to get advised, reports Accenture’s survey on Digital Disconnect in Customer Engagement. Hence as an industry, we shall continue to be human intensive as we deal with people during the times of their crisis, with utmost empathy.
Insurance sales cannot be automated
Third and the most important point to the entire discussion is what the future of work will hence be like. Yes droids are going to take a chunk of our jobs away. But there are things that a machine intelligence cannot do. They cannot handle novel situations, they cannot handle things they have not seen many times before. Machines cannot compete with us when it comes to tackling novel situations, and this puts a fundamental limit on the human tasks that the machines will automate. Hence they may get smarter and smarter at the frequent, high-volume tasks, such as issuing policies and locating the nearest garage/ branch / hospital. But when it comes to the complex processes of handling business and marketing strategies, humans will always have the final say. Insurance is very much an advisory driven business, and this advisory is required for insurance to be sold and the customer to be taken towards the right product fit. This is why I feel that insurance sales cannot be fully automated.
Hence as an industry, the insurers need to strategize their talent pool in such a way that they capitalize the best out of each employee, while being prepared to face the bytological future. They need to be well aware of the fact that 25% of their employees are going to retire soon. They should also realize the need to build a talent pipeline not just of underwriters, claims and sales professionals but technology backed candidates to fill the new hotbed jobs in the insurance industry that revolve around technology and Big Data analytics. It is imperative to benchmark these crucial skills, and to have appropriate recruitment and skill development processes in place to hire and up-skill people across multiple functional disciplines (like risk, decision sciences, marketing, and operations).
The previous industrial revolution infinitely multiplied the power of human muscles, while the current one shall infinitely multiply our mental power. As a digital optimist, I have always believed that the technological advancements bring change for the good. Rather than being apprehensive of them, businesses need to embrace and adapt these to chart and discover new frontiers. We need to understand that businesses do not run on capital or labor or technologies. They rather run on innovations, on ideas. And as long as the human race is capable of cross pollinating innovations, they shall continue to be the overlords of machines.
Tapan Singhel, CEO & MD, Bajaj Allianz General Insurance Co. Limited, writes this piece for the latest edition of FICCI’s Financial Foresights.
In today’s scenerio we need human workforce particularly in rural areas to tap the maximum insurance potential particularly in health sector and in rural and social sector
Really great article. We actuaries are embracing new technology like machine learning and artificial intelligence. As we understand business and now data in more depth, we can really add value in this domain.
Insurance is a subject matter of “EMOTION” whether Life or Non-Life , technology is going to add ease to the process and experience yet will have limitation while dealing with Customer “EMOTIONs” and hence Insurance Job and technology would go hand in hand !