While social media networks were flooded with anti-Israeli posts, more than 25 Israeli tech companies and startups attended the annual InsureTech Connect event, which was held in Las Vegas last month, and showed the world Israel’s ability to continue conducting business during wartime.
At the conference, it was clear that AI is the most prominent topic preoccupying the entire industry from insurers, reinsurers, insurance agencies, investors, and startups. Every 20 years a wave of technological disruption appears, which changes our lives, and creates complementary industries. Without doubt, the latest disruptor, is AI, which is accelerated by machine learning, and over the last year by generative AI. Senior figures in the insurance industry are required to determine if this is the next big thing or just another passing fad.
The global insurance industry is worth $7 trillion in annual premiums. All of us are its customers. Small businesses, large companies and private consumers. This is an industry focused on managing risks and as the area of risks in the reality of our lives changes, so too opportunities arise for innovations in the field. In addition, this is an industry rich in bureaucratic processes that provide an opportunity for automation and improving the customer experience. Insurance companies realized several years ago that using data is worth money. For example, life insurers have created models to predict the probability of contracting a chronic disease, based on medical records. Accordingly, preventive care programs are being offered with the aim of extending the client's life and improving their quality of life. In underwriting policies for buildings, computer analysis of satellite images predicts the chances of a building surviving a natural disaster, such as a hurricane or flood.
In the forefront of startups, according to FT Partners, $5 billion was invested was venture capital investors in startups in the sector, even though the index of publicly traded insurtech companies fell from 200 points in January 2021 to 70 points in September 2023, posing a threat for IPO exists. As part of the conference the Foward50 list was presented of the 50 most promising startups in the sector, including Israeli company Digital Owl, which conducts an automatic scan of medical records and makes the information accessible to insurance companies within two hours instead of several days. These companies, most of which were founded over the last five years, gained investors’ trust for growth even though the previous wave of startup companies that held IPOs in 2020-2021 have presented negative returns.
Over the past year, generative AI has spread like wildfire. It is different than previous AI categories in that it creates content based on existing data. It is based on large language models, which excel in summarizing and abstracting information and semantic searches. In the world of insurance, a common example is the use of a ChatGPT like bot. Imagine a claims adjuster at an insurance company receiving a claim from a customer. She must read the claim, compare it with the policy, examine the client's claim history, decide if the claim is covered and the compensation level. Instead, they can have a dialogue with the bot by simply typing in the question, "Is the claim covered by the policy?" The bot will respond accordingly and update the claims adjuster on items that are not included. A predictive model will estimate the chance of the claim resulting in a lawsuit.
Large insurance companies like Sompo, AXA, Allstate, and State Farm have taken the first steps in integrating generative AI models. Examples of applications that can transform our experiences include policy production in minutes, personalized insurance coverage, claims reimbursement in hours or minutes and fraud detection. In short, the AI wave should transform the way insurance companies do business. Insurance companies can become more efficient, assess risks more accurately, and provide better service to their customers.
And back to the conference that was held in Las Vegas. During the opening session of the conference, in which there were 9,000 participants, the moderators asked those present from Israel to stand to the applause of the audience. The representative of the Israeli startup community, Kobi Bendelak, was invited to speak and it was clear that the contribution of Israeli innovation to the global insurance industry is not going away.
The author is CEO of Sompo’s Digital Lab Israel. Sompo is a global insurance giant.
Published by Globes, Israel business news - en.globes.co.il - on December 4, 2023.
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