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The Future of AI Is Now
It’s been an interesting couple of months. In between helping to set up a new IoT insurance center in Munich whilst being caught up in corporate restructuring, I’ve also been catching up on my reading.
There’s a lot in the press about “artificial intelligence” and “cognitive analytics” — in effect the whole issue of machine learning. I’m thinking a lot about how this might not only affect insurance business models but also individual professions within the insurance industry.
Along the way, I also suffered my own insurance claim — I’ll share details in a moment or two — and saw how AI and the “real world of claims” seem to come together.
In my research I came across a very interesting academic paper called “Future Progress in Artificial Intelligence: A Survey of Expert Opinion,” which I would commend to you. The paper, originating at the Future of Humanity Institute of the University of Oxford, points to concerns about the impact of AI on humanity and how it will bring “significant risks.”
If we look at 10 years [from now], then insurance in an AI environment will happen within our immediate working lives.
It makes the point that these risks to humanity have either been ignored in the past or considered to be science fiction.
In my presentations I often refer to the movie “Minority Report,” which is based on the Philip K. Dick science fiction story about predicting thought crime, and I argue that these capabilities are already with us — even if flying through the ether is not yet currently available.
Cognitive analytics are already piloted in health care and wealth management. But the long and short of it is that some major insurers are already thinking hard about cognitive analytics and AI in the context of the Internet of Things.
So when will all this happen in reality?
The experts say that there is a one-in-two chance that high level AI “will be developed around 2040-2050, rising to a nine-in-10 chance by 2075.” They also say incidentally that there is a one-in-three chance that this will be “bad for humanity,” but let’s save the ethical questions for a different day.
These are average figures, but let’s drill down a little more deeply.
Of the group of 123 eminent scientists surveyed, 11 percent say that we will understand the architecture of the brain sufficiently to create machine simulation of human thought within 10 years. Of this, 5 percent suggested that machines will be able to simulate learning and every other aspect of human learning within 10 years.
They also predicted machines will have the specific levels of maturity worthy of a third grade school exam by 2030, the Turing test (in which an observer cannot tell the difference between a conversation with a human or a machine) by 2040, and Nobel-level research by 2045.
So, let’s roll the insurance clock forward either 10 or 30 years depending on how bullish you feel. If we look at 10 years, then insurance in an AI environment will happen within our immediate working lives.
Even if you have retired, you will still be affected as it will impact the way you buy cover and the way your claims are serviced.
If we look at a longer timescale of 30 years, then the grads and interns coming into the industry today will be using this before they finish their careers.
For what it’s worth, I think it will happen sooner rather than later.
But, I promised to tell you about my own claim.
My delayed flight back from Munich to London was much delayed, and I was greeted at about 1 a.m. with a flat battery in my car. I called the auto breakdown insurer who promised a repair guy within 30 minutes who actually turned up in 20 minutes.
Not only did he bring a professional solution in the middle of the night, but he also brought with him a smile, which made all the difference to a tired guy like me. Great service, great attitude.
At the end of the day, isn’t it still going to be about the basics, especially at the claim’s “moment of truth?” I really hope that the AI that we eventually learn to live with in insurance will recognize the importance of service and the very great power of customer advocacy.
Hot Hacks That Leave You Cold
Thousands of dollars lost at the blink of an eye, and systems shut down for weeks. It might sound like something out of a movie, but it’s becoming more and more of a reality thanks to modern hackers. As technology evolves and becomes more sophisticated, so do the occurrence of cyber breaches.
“The more we rely on technology, the more everything becomes interconnected,” said Jackie Lee, associate vice president, Cyber Liability at Nationwide. “We are in an age where our car is a giant computer, and we can turn on our air conditioners with our phones. Everyone holds data. It’s everywhere.”
Phishing Out Fraud
According to Lee, phishing is on the rise as one of the most common forms of cyber attacks. What used to be easy to identify as fraudulent has become harder to distinguish. Gone are the days of the emails from the Nigerian prince, which have been replaced with much more sophisticated—and tricky—techniques that could extort millions.
“A typical phishing email is much more legitimate and plausible,” Lee said. “It could be an email appearing to be from human resources at annual benefits enrollment or it could be a seemingly authentic message from the CFO asking to release an invoice.”
According to Lee, the root of phishing is behavior and analytics. “Hackers can pick out so much from a person’s behavior, whether it’s a key word in an engagement survey or certain times when they are logging onto VPN.”
On the flip side, behavior also helps determine the best course of action to prevent phishing.
“When we send an exercise email to test how associates respond to phishing, we monitor who has clicked the first round, then a second round,” she said. “We look at repeat offenders and also determine if there is one exercise that is more susceptible. Once we understand that, we can take the right steps to make sure employees are trained to be more aware and recognize a potentially fraudulent email.”
Lee stressed that phishing can affect employees at all levels.
“When the exercise is sent out, we find that 20 percent of the opens are from employees at the executive level,” she said. “It’s just as important they are taking the right steps to ensure they are practicing what they are preaching.”
Locking Down Ransomware
Another hot hacking ploy is ransomware, a type of property-related cyber attack that prevents or limits users from accessing their system unless a ransom is paid. The average ransom request for a business is around $10,000. According to the FBI, there were 2,400 ransomware complaints in 2015, resulting in total estimated losses of more than $24 million. These threats are expected to increase by 300% this year alone.
“These events are happening, and businesses aren’t reporting them,” Lee said.
In the last five years, government entities saw the largest amount of ransomware attacks. Lee added that another popular target is hospitals.
After a recent cyber attack, a hospital in Los Angeles was without its crucial computer programs until it paid the hackers $17,000 to restore its systems.
Lee said there is beginning to be more industry-wide awareness around ransomware, and many healthcare organizations are starting to buy cyber insurance and are taking steps to safeguard their electronic files.
“A hospital holds an enormous amount of data, but there is so much more at stake than just the computer systems,” Lee said. “All their medical systems are technology-based. To lose those would be catastrophic.”
And though not all situations are life-or-death, Lee does emphasize that any kind of property loss could be crippling. “On a granular scale, you look at everything from your car to your security system. All data storage points could be controlled and compromised at some point.”
The Future of Cyber Liability
According to Lee, the Cyber product, which is still in its infancy, is poised to affect every line of business. She foresees underwriting offering more expertise in crime and becoming more segmented into areas of engineering, property, and automotive to address ongoing growing concerns.”
“Cyber coverage will become more than a one-dimensional product,” she said. “I see a large gap in coverage. Consistency is evolving, and as technology evolves, we are beginning to touch other lines. It’s no longer about if a breach will happen. It’s when.”
About Nationwide’s Cyber Solutions
Nationwide’s cyber liability coverage includes a service-based solution that helps mitigate losses. Whether it’s loss prevention resources, breach response and remediation expertise, or an experienced claim team, Nationwide’s comprehensive package of services will complement and enhance an organization’s cyber risk profile.
Nationwide currently offers up to $15 million in limits for Network Security, Data Privacy, Technology E&O, and First Party Business Interruption.
Products underwritten by Nationwide Mutual Insurance Company and Affiliated Companies. Not all Nationwide affiliated companies are mutual companies, and not all Nationwide members are insured by a mutual company. Subject to underwriting guidelines, review, and approval. Products and discounts not available to all persons in all states. Home Office: One Nationwide Plaza, Columbus, OH. Nationwide, the Nationwide N and Eagle, and other marks displayed on this page are service marks of Nationwide Mutual Insurance Company, unless otherwise disclosed. © 2016 Nationwide Mutual Insurance Company.
This article was produced by the R&I Brand Studio, a unit of the advertising department of Risk & Insurance, in collaboration with Nationwide. The editorial staff of Risk & Insurance had no role in its preparation.