Machine learning to affect consumer pricing, costs of product development: survey | Canadian Insurance

Machine learning to affect consumer pricing, costs of product development: survey

Insurance professionals share their views on what this technology will mean to the industry

The economics of providing insurance products to the public will change greatly with more popular use of machine learning, according to a global survey of insurance professionals conducted by Earnix.

Three-quarters (76%) of respondents believe that the technology will have a significant effect on the pricing of insurance products. However, North American insurance professionals (26%) are less convinced of this than their non-North American counterparts, of whom 47% believe machine learning will affect pricing.

In addition to price, 52% of insurance professionals believe machine learning will lead to greater automation. This will produce cost savings and “increase the bandwidth of these valuable employees, allowing them to focus more on insights and less on development,” the report states.

One-third of surveyed professionals are also betting that the use of machine learning will facilitate an enhanced customer experience.

More than half (54%) of insurance professionals say they have implemented machine learning practices in their businesses, with 70% saying they use them specifically to create risk models. Other uses include the creation of demand models for 45% of respondents and the detection of fraud for 36%.

Although machine learning is a relatively new practice, most organizations are realizing measurable results. The top three results are greater analytical accuracy, for 57% of respondents; better decision making processes, for 37%; and in-depth and comprehensive assessment of risk for 32%.

There is still work to be done in the area of educating insurance professionals in the use of machine learning. Only 4% consider themselves experts on the technology and14% say they have advanced knowledge while 81% say they have a beginner or intermediate level of knowledge.

Survey responses were collected online from 193 insurance professionals from companies that provide personal lines coverage in countries around the world. More than one-third (37%) of insurers are from North America while 63% of respondents are from outside of that region. More than three-quarters (82%) of the respondents represent insurance carriers and 6% are brokers.