Artificial Intelligence in Insurance – Three Trends That Matter
Artificial intelligence is likely to affect the entire landscape of insurance as we know it. Change is here, more is coming. Today, the insurance market is dominated by massive national brands and legacy product lines that haven’t substantially evolved in decades. This kind of stagnations has historically suggested that it is an industry ripe to be disrupted- see the transportation industry and the raise of ride-share applications.
Insurance is an industry that venture capitalists consider so ripe for disruption that the founders of Lemonade, a New York-based insurtech company, raised one of the largest seed rounds in history simply by talking. It’s not just the venture crowd. Warren Buffett has gone on the record saying that the coming of autonomous vehicles will hurt premiums for Berkshire-owned Geico.
Buffett may have been referring to a 2015 KPMG report which predicts that “radically safer” vehicles, including driverless technology, will shrink the auto insurance industry by a whopping 60% over the next 25 years. Readers should note that auto insurance is more than 40% of the insurance industry as a whole.