High tech data use to expand viable insurance product lines

Better data analysis powered by machine learning and artificial intelligence will open up new revenue opportunities for insurers, Google Cloud APAC Director of Financial Services Stuart Houston says.

Unprofitable products – or areas where there was a lack of reliable information to price risk — could become viable product lines as the added insights enabled by machine learning and artificial intelligence will open the door for “smaller or even micro” product lines, he says.

This will be particularly true in commercial insurance, or protecting the “treasured possessions of customers, no matter how obscure”.

“This could mean insuring items of smaller value — which may have been unprofitable in the past without new technologies — or providing insurance options to parts of the developing world, where these have been insufficient, or even non-existent.”

Mr Houston says there is scope to further use technology across the industry to make processes more efficient and “in turn facilitate a world of new revenue opportunities”. It would also allow for more personalised policies, and a means of calculating risk that makes the policy profitable for insurers and affordable for customers.

“As we look ahead, harnessing data further to reinvent the way customers are protected, and offer new products, will separate the leaders from the laggards,” he said. “It’s a win-win for insurers and customers.”

Google Cloud also says machine learning and artificial intelligence will deepen a shift from the insurance industry’s current “restoration and recovery” model to one of prevention and prediction via personalised advice based on data.

For example, new tech-based analysis methods could reveal a roof is prone to leaking using satellite imagery, calculate the probability of a motor vehicle accident in real time, and accurately predict flood and fire zones.

“Ultimately, it will see the role of insurers’ in our society change to be an advisory service,” Mr Houston said. “Stakeholders will increasingly rely on the advice of insurers to adapt their own businesses to meet…major challenges.”