Michael Moline
Imagine not having to buy car insurance — it’s provided by your ride-sharing service.
Imagine widespread use of devices that track your health or driving habits, feeding masses of data to an insurer that offers discounts for good behavior.
Or installing monitors in your home capable of monitoring storm damage and the quality of repairs.
Those were among the possibilities the Office of Insurance Regulation highlighted during its annual industry summit in Tallahassee Tuesday.
The rise of artificial intelligence, or AI, promises to disrupt virtually every industry — insurance most definitely included, according to state Sen. Jeff Brandes, and Guy Fraker, chief innovation officer for the Insurance Thought Leadership think tank.
“Artificial intelligence is the new electricity. It begins to hit every single industry — much like electricity hit them back 100 years ago,” said Brandes, a St. Petersburg Republican who sits on the Banking & Insurance Committee, among others.
Brandes and Fraker participated in a discussion moderated by Insurance Commissioner David Altmaier.
“Artificial intelligence is a tool, like a hammer, until you apply it,” Fraker said. “And then, once you start to apply it, a whole new world opens up.”
AI is disrupting industries that have nothing obvious to do with insurance, Altmaier said.
“But at some point insurance is going to have to be responsible for those things, in terms of covering that new innovation and being ready and able to step in when electric cars or driverless cars or what have you become much more prevalent,” he said.
Henry Ford gets credit for taking the auto industry viral though mass assembly, Fraker said. But more credit belongs to the “bunch of mavericks” who invented auto insurance.
AI offers the industry “a window of opportunity” to turn its potential disruptions into advantages, he said.
Florida is well situated to participate in the revolution, Brandes said. Key technology is being developed here, and the state is pitching Miami as a test site for passenger drone service. Developers are adding landing pads to high-rise rooftops in anticipation.
These systems entail a loss of privacy, Fraker conceded. But people already cede their privacy as a condition of many internet services.
“How many people really believe you have any privacy left anyway?” he asked the audience. “If anybody does, we’ll talk out in the hall.”
The life insurance market is already seeing these innovations, Fraker said, with disability and health insurers to follow. DNA data play not nearly the role they’re going to — he compared the implications for life insurance to those of the driverless car for the auto market.
“The life insurance industry and the regulatory industry really do need to start ramping up,” he said.
What about the future of insurance agents? “You’ll still have a professional. Her name is Alexa,” Fraker cracked.
But turning one’s policy over to an interface offers obvious advantages.
“We can make it competitive, we can make it easy, we can have the best user interface, but it’s for a product nobody wants to think about,” he said.
“The artificial intelligence job to be done, that could very well go viral, is making it invisible — by embedding it in the things we own, by making it on-demand, by using your phone to know when you’re going faster than a human can walk. That’s where we’re going to see the next generation of real breakthroughs, when insurance is actually something people don’t have to think about unless they want to.”
Additional opportunities are opening in flood and cyber insurance, Brandes said. Florida has been encouraging the private flood insurance market and, as of last year, 30 companies insured around 30,000 customers against that risk.
He expects that total to reach 60,000 this year.
And there’s a chance to defang intractable political disputes — say, over reforming Florida’s no-fault insurance system, “when we stop buying individual cars and start buying trips,” Brandes said.
“Much like with Uber, the insurance is included in that mile of trip. That is the major disruption that the auto industry and, quite frankly, the insurance industry, begins to see,” he said.
AI cars “are less likely to get into accidents, and their policies are going to be richer.” Florida now requires drivers to carry $10,000 in coverage; Uber provides $1 million in coverage per trip.
And new players — including the auto companies, facing declining profit margins — are likely to enter the insurance market.
“Today you can finance your car from Ford. Why can’t I insure my car through them, as well?”
