Services account for almost 80% of the UK economy, with financial and professional services alone employing around 2.2 million people and valued at £190 billion. New technologies such as artificial intelligence (AI), blockchain and big data analytics, combined with new business models, are disruptive for the economy. This is particularly true for the financial industry, an industry that is expanding to and from other industries. InsureTech (insurance technology) is one sub-industry that attracts a lot of attention, because the technologies above are able to create new business opportunities and value-added for consumers, thus having the potential to boost economic growth.
Earlier this year, UKRI asked academics to propose a research project to map the future of tech-driven legal and financial services, to boost productivity and improve customer experience. The Next-Generation Services Challenge was seeking to take on the biggest industrial and societal challenges of our time. Loughborough University’s SBE team, led by Professors Milne and Holland, proposed a research project called ‘Technology Driven Next Generation Insurance’, a collaborative research project between industry and academia, that secured over £1.2 Million from the Economic and Social Research Council (ESRC) and an additional £210,000 from a number of key players in the current insurance industry, and those that have aspirations to expand towards this industry.
The team will identify and map the opportunities for AI-based innovation in the UK insurance industry. We will examine how these technologies are changing business processes and business models in underwriting and risk analytics, claims processing and in customer engagement, examining the barriers to adoption and the enablers of change.
Traditionally, if one can assign ‘tradition’ to a young industry such as fintech, most UK Research Council funds for fintech go to the Engineering and Physical Sciences Research Council (EPSRC), rather than the ESRC, so in that respect, this project is quite novel with its emphasis. Although led by social scientists, it is an interdisciplinary (IDR) project, bringing together tech companies, manufacturers and academics from many disciplines.
The Project Agenda
The project will run over 27 months and will include three major phases:
- Providing a clear and comprehensive summary of the main opportunities from the application of AI in insurance.
- Developing empirically-tested models and analyses of what needs to be done to support the successful application and adoption of AI in the insurance industry (and of other data technologies such as machine learning, automated processing, expert systems, distributed ledgers and big data analytics).
- Creating tools and frameworks of knowledge that will allow practitioners and policy makers to best support the development and adoption of AI technologies.
Aligned with these three phases, the team will build not only accumulative knowledge in the form of academic outputs, but also tangible impact on all stakeholders in this industry – an impact that will hopefully have a ripple effect following the project’s conclusion.