How AI Is Impacting the Future of Insurance

McKinsey & Company, Ramnath Balasubramanian, Ari Libarikian, and Doug McElhaney | May 2018

In Insurance 2030—The Impact of AI on the Future of Insurance, McKinsey and Company’s Ramnath Balasubramanian, Ari Libarikian, and Doug McElhaney, identified the following AI trends that are shaping the insurance industry:

  • Explosion of data from connected devices
  • Increased prevalence of physical robotics
  • Open source and data ecosystems
  • Advances in cognitive technologies

“AI and its related technologies will have a seismic impact on all aspects of the insurance industry, from distribution to underwriting and pricing to claims,” they wrote. “Advanced technologies and data are already affecting distribution and underwriting, with policies being priced, purchased, and bound in near real time. An in-depth examination at what insurance may look like in 2030 highlights dramatic changes across the insurance value chain.”

“In this evolution, insurance will shift from its current state of ‘detect and repair’ to ‘predict and prevent,’ transforming every aspect of the industry in the process. The pace of change will also accelerate as brokers, consumers, financial intermediaries, insurers, and suppliers become more adept at using advanced technologies to enhance decision making and productivity, lower costs, and optimize the customer experience.”

AI will impact the element of the insurance industry from distribution to underwriting and policy to claims. “The rapid evolution of the industry will be fueled by the extensive adoption and integration of automation, deep learning, and external data ecosystems,” they added. “…[N]o one can predict exactly what insurance might look like in 2030…”

McKinsey’s full report, Insurance 2030, can be downloaded here.