Kevin Baughan, Deputy Chief Executive Innovate UK
The insurance industry must ready itself for the arrival of very different technology combinations which will rewrite the rulebook, as Kevin Baughan of Innovate UK explains to Intelligent Insurer.
The insurance industry must ready itself for the arrival of very different technology combinations which rewrite the rulebook if it is to truly grasp the potential of the changes the world, and the industry, face as a result of innovation and breakthroughs in technology.
That is the view of Kevin Baughan, the deputy chief executive of Innovate UK, the operating name of the Technology Strategy Board, the UK’s innovation agency, who is one of the speakers at the Intelligent Automation in Insurance event being run by Intelligent Insurer in London on April 26.
Baughan explains that Innovate UK sees its role as operating at the frontier of the UK’s economy, accelerating growth by funding and connecting business-led innovation in order to address the global market opportunities of the future.
“In every part of the economy we see evolutionary and revolutionary change. How incumbents respond and adapt to the constant flow of new technologies and how new entrants choose to exploit them in order to level the playing field, will often determine the future shape and structure of our industries,” he says.
He notes that the change might be in healthcare, through the arrival of leading-edge cell and gene therapies in the treatment of disease, or in auto manufacturing, through the electrification of vehicles where batteries now become the critical component, typically accounting for half of the total value of the car.
It might even be through the arrival of artificial intelligence (AI) into a world of data-driven, knowledge-intensive service industries such as insurance.
“Here, it could be applied in very different ways: to automate and optimise existing approaches; to augment the decision-making provided by human intelligence with AI or in the longer term; or to enable much higher levels of autonomy through the application of artificial generalised intelligence,” Baughan says.
Kevin Baughan will be speaking at Intelligent Automation in Insurance in London on April 26. Find out more here.
He notes that the opportunities from the creative augmentation of human intelligence with AI, may seem distant when compared with the more predictable and robust opportunities, which can be achieved through automation.
“It will certainly usually be easier in any sector to explain and justify the benefits of evolutionary opportunities which are based on technology-pull. By definition, they are usually closer to the market and reflect the needs of an established customer base,” he says.
“But we must also be ready for the arrival of very different technology combinations which rewrite the rulebook.”
For example in healthcare, new precision medicines have been developed, replacing traditional blockbuster drugs focused on symptoms. These utilise advanced therapies, which are focused instead on causes.
“Similarly in auto manufacturing, the disruptors are busy replacing the whole paradigm of individual car ownership with that of shared ownership and a fleet of driverless cars, which are summoned only when you need them,” he says.
“Will anyone born today ever need to buy a car or even take a driving test? It’s a valid question. However, game-changing technology-push opportunities can be very difficult to realise, as entirely new value chains may need to be created. But when they are successfully implemented, they may leave a path of creative destruction in their wake.”
The evolutionary technology
Baughan stresses that an incumbent in a sector will often be drawn to the momentum of evolutionary technology-pull – where new innovations are driven by research and development but not necessarily customer demand.
“As a consequence your exposure will lie in the inertia created by your own past experiences. If you are a disruptor, you are understandably drawn to the rule-changing paradigms of ground-breaking new technologies and as a consequence your exposure lies in putting in place those complete value chains, which are needed before you can effectively serve your first customers,” he says.
“It’s no wonder that to mitigate those risks, UK companies operating in some of our most globally competitive markets such as auto and pharma proactively explore disruptive change through collaboration. They are bringing together novel research outcomes and innovative technology pioneers with their existing value chains in order to redefine themselves before a competitor does it for them—or rather, to them.”
He adds that the UK government’s recently published Industrial Strategy, published in November last year, identified four grand challenge areas where it considers that the UK has the research and commercialisation strength to lead the global markets of the future.
The grand challenges are centred on clean growth, the future of mobility, an ageing society and those parts of the economy which will be transformed through AI and data. In the case of the latter one of the specific challenges identified was for a £20 million pioneer fund to explore the next generation of services in the context of the UK’s world-class AI research base. This will provide funding to enable the UK services industry to better understand and leverage the opportunities ahead, which will be powered by the revolutionary capabilities of AI.
Imagine intelligent augmentation
At the Intelligent Automation in Insurance conference, Baughan will be asking delegates to reimagine the insurance industry not only in terms of intelligent automation but also in terms of intelligent augmentation.
“The application of AI to services may well start with evolutionary opportunities such as in the automation of existing activities, which require human-like intelligence. I will argue that this is very likely to be followed by far more revolutionary opportunities, which emerge from the application of AI to the creation of completely new approaches based on augmenting human intelligence with the very different nature of AI,” he says.
“We can confidently expect this to happen, because we see it already in other sectors of the economy, such as healthcare, where the creation of completely new approaches to solving problems with AI is already established.”
He adds: “I will be inviting delegates to think boldly about the future of the insurance industry beyond intelligent automation to intelligent augmentation. At the same time I will explain how the government’s new Industrial Strategy Challenge Fund is creating a unique opportunity for the insurance sector to work together with the research base in order to keep its highly successful service industries at the forefront of the AI-powered world ahead of us.”
To find out more about the Intelligent Automation in Insurance conference on April 26 in London please click here.
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