Artificial Intelligence (AI) holds significant promise for the future of risk engineering. There is no doubt about it. AI can analyse huge amounts of data well and can help insurers assess risk more effectively. This can lead to better underwriting decisions, pricing models, and loss prevention strategies.
So, is this it? Has technology superseded the need for human risk engineering consultants?
New ground gained
In my 34 years as a risk engineer, the introduction of AI has been a game changer - over 50% of insurance executives in the UK already invest in AI and its multiple benefits. AI algorithms can sift through large datasets like never before. These include historical claims data, customer info, and outside factors like weather or the economy.
AI analysis can find trends, correlations, and risk factors humans might overlook. As a seasoned professional, this is hard to admit but true!
So what additional benefits are there? AI can use machine learning to make predictive models. This analysis can then help forecast future risks better and faster and help insurers predict potential losses. It also acts as a prompt for insurers to reduce losses - all important factors.
This new and developing technology analyses individual risk profiles at speed. It uses the profile created to tailor insurance products and risk strategies for each customer's unique needs. AI can watch many risk factors too. It gives insurers real-time insights into new threats. It can also show changing conditions that may affect insurance portfolios. And so the long list of positives goes on.
Is technology alone the answer?
AI offers immense potential. However, it's important to recognise that it's not a silver bullet or a simple solution to a complex issue. Human risk engineers are still key in interpreting AI insights. We ensure ethics are upheld and decisions are based on a full understanding of risk.
AI can augment and enhance human abilities in insurance risk engineering. However, it can't totally replace what other risk engineers and I add. As such, the best approach may be to use AI as a tool to support and complement human expertise. This could allow insurers and customers to get the best results in managing risk.
Using AI effectively in risk engineering
AI will be used to increasingly answer technical questions, I have no doubt. The technology has the potential to allow the risk engineer to move from having to find the data to providing insight from the data. This saves time, providing clients with more actionable insight, and driving client experience.
It is this combination of activity, led by risk engineers, which allows risk consultancy teams to deliver the best risk solutions. People want to deal with people. As such, I believe this approach will dominate future risk engineering propositions.
Getting the right people
To get this balanced approach we need to have the right people in place to manage the process. Most risk consultants have a risk engineering degree. This said, our top priority is to hire and keep people with strong sector specialisms and expertise. It’s a delicate balance but I believe this to be the best approach, and it works.
You can develop risk management skills through ongoing training and learning camps. But gaining deep, sector-specific knowledge can take years or even decades. RSA does this to great effect and we are proud of the levels of expertise we offer. Progressive insurers are following this approach.
Going forward, risk engineers will need to get more comfortable with data and data analytics. They must marry it to their industrial knowledge. This is a broadening of the role and part of the need to continually improve.
In conclusion
Overall, AI is transforming risk engineering in insurance. It provides more accurate risk assessments, enhancing real-time monitoring. It also boosts efficiency through automation, and enables more personalised and proactive risk management.
These advancements are leading to better risk reduction. They also lead to lower losses and improved customer satisfaction. However, this tech needs to be complemented by personal interaction. This is brought about by specialist risk engineers.
Risk consulting may be using more AI to be efficient and accurate. However, experienced risk engineers will remain at the heart of good risk engineering for many years to come.
This article forms part of a series covering the latest views and insights from RSA’s Risk Consultancy team. Find out more about our Risk Consulting offering.
