Machine learning tools are on the rise and are being used to assess risk, detect fraud, and predict price. With the growing challenge of fraud, coupled with 1 in 3 in Ireland believing over 20% of insurance claims are fraudulent, what impact can machine learning have on the future of insurance?
It is commonly thought that machine learning is just another phrase for artificial intelligence (AI), though they are closely related, they are not the same. For many, machine learning is the watershed moment in computing and is already changing the face of many industries.
But what is it? In short, machine learning uses mathematical models of data to help a computer learn without direct instruction. To learn through training and experience, rather than the traditional approach of being programmed with set rules.
Applied AI has come a long way since IBM’s Big Blue played chess with Gary Kasparov in 1995, with the champion winning 4-2. In 2017 DeepMind’s AlphaGo, developed by Google, was beating world number one player Ke Jie, at Go, acknowledged as one of the most complex strategy games in the world.
Of course, machine learning can be used for so much more than playing games and beating champions! The same techniques that predict the behaviour of an opponent to improve the performance of a player can and are applied to improve just about anything.
Whether you are running drug trials, autonomous driving or even insurance, one of the fundamentals of machine learning is the ability to interpret and evaluate risk. And we all know how important risk is in insurance.