AI gives insurers god-like powers, says Sompo chief

AI gives insurers god-like powers, says Sompo chief

Artificial intelligence and state-of-the-art data analysis software mean that underwriters can now make predictions about weather, natural disasters and senile dementia that “only God knew” before, claimed the chairman of one of Japan’s largest insurance companies.

The bold claim by Mikio Okumura, director of Sompo Holdings, comes as the company prepares to roll out Japan’s first dementia prevention insurance program – a product designed for the world’s oldest company and based on the analysis of the heartbeats, appetite and sleeping habits of thousands of people. nursing home residents.

Sompo’s move marks the latest escalation in the insurance industry’s battle to gain an advantage through technology. Okumura said this is a field of competition that will decide the survivability of individual companies when they move away from their conventional business areas.

The ‘god’ claim follows Sompo’s $500m investment two years ago in US big data analytics specialist Palantir and its 22% stake in a start-up Japanese AI-up, Abeja.

“We can now reveal things that in the past only God knew, thanks to technology, including AI,” Okumura said, outlining a plan for an insurance plan that not only pays when symptoms of dementia occur, but also attempts to delay the onset of the disease by encouraging clients to change their daily behavior.

Sompo aims to use 500 sets of data obtained from 80,000 residents of its retirement homes, a venture the company entered in 2015, to create preventative insurance tailored to everyone’s lifestyle. In 2020, 6.3 million people were estimated to have dementia in Japan, and that figure is expected to rise to 11 million by 2060, which will equate to nearly one in three elderly people, according to the Cabinet Office.

Palantir’s technology has so far enabled the insurer to analyze data correlations and create a model to suggest improvements to care plans for each resident. Okumura hoped that these “big data” skills could now serve its core insurance business, helping the company develop an insurance package that “avoids risk”.

“We will encourage our customers to change their behavior and such a solution could be attached to the medical insurance of people who are still of working age,” Okumura said. “If they manage to delay the symptoms of dementia [for two or three years]we can offer them cheaper insurance.

“This will reduce the burden on supporting families, extend the client’s healthy life expectancy and reduce insurer insurance payments. . . As a result, the national social security system will become more sustainable,” he added.

Sompo, like other insurers, is also keen to use ever more powerful tools to update the insurance business model in a world increasingly affected by the effects of climate change. Insurers around the world have been forced to deal with a surge in payments for natural disasters, with events ranging from the worst drought in Europe for 500 years this summer to devastating floods in Pakistan.

Following Hurricane Ian’s destructive rampage in Florida and South Carolina in September and October, risk modeling firm Verisk said in its initial reports that insurance companies were prepared for a hit of up to 57 billions of dollars due to estimated wind, storm surge and inland flooding losses.

By combining historical data on damage caused by typhoons or floods with predictions of future climate change, Okumura believes Sompo can, for example, estimate the extent of natural disasters and economic losses, and give suggestions to customers. to modify the structure of buildings to mitigate damage.

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