Insurers launch artificial intelligence of things (AIoT) risk management solutions

Insurers are combining artificial intelligence (AI) technology with the internet of things (IoT) to create artificial intelligence of things (AIoT) risk management and loss prevention services for corporate clients. AXA XL, for example, is using AIoT to develop a digital risk engineer concept that can analyse data from sensors and other connected devices. The move is part of a growing range of risk management services being developed for its corporate clients, either standalone or alongside insurance. “We are beginning to offer more risk management offerings, either outside insurance or combined with insurance cover. Larger corporate clients have high limits and retentions and there is a lot that can be done to manage risk within retention levels,” said Hélène Stanway, digital leader at AXA XL in London. The insurer recently launched a technology-based risk management solutions incubator called CUBE, and is now bringing different technologies together to provide a holistic view of risk, explained Ms Stanway. For example, it is using a combination of camera technology, sensors and AI-powered risk analytics and big data to monitor construction sites. This enables risk managers to take steps to prevent accidents and fix defects during the construction phase, and includes a sensor capability that monitors eight environmental factors on construction sites. Once building is complete, risk engineering and building management is also subject to innovation. “We have developed a digital risk engineer – a black box that plugs into a building management system with the aim of reducing the frequency and severity of loss by identifying problems before they materialise,” said Ms Stanway. The concept of a digital risk engineer can be applied to various industries and risks. The role brings together AI with connected devices – like sensors, industrial control systems and cameras – to produce useful information on risk that can be acted upon. It is also possible to combine IoT data with third-party data. AXA XL is using environmental sensors and micro weather data to help prevent the toppling of tower cranes on construction sites. “The artificial intelligence of things will enable huge amounts of data to be collected from devices and analysed for risk management and loss prevention purposes,” explained Ms Stanway. “From a risk management point of view, IoT is a great disruptor but you need AI to turn it into meaningful data and gain insights at an aggregate level,” she said. FM Global is also using AIoT for loss prevention. For example, the specialist commercial property insurer is developing a ‘hot-work robot’ that uses visual AI technology to monitor an area for smoke and fire following hazardous work. The robot, which should be ready for testing early this year, replaces the need for companies to carry out a four-hour watch in-person after hot work. FM Global is also using thermal imaging technology to monitor switch gear and other electrical connections, another major cause of fire. “IoT will fundamentally change insurance cover for equipment failure. New equipment typically comes with sensors built in, which gives us the ability to carry out predictive analytics, helping clients more efficiently invest in loss prevention. IoT will generate lots of data and we are now building algorithms to get insights on risk. However, we will have to partner with clients if we are to get meaningful insights,” said Mike Lebovitz, senior vice-president for innovation at FM Global. There are many opportunities to use data and IoT – such as sensors to monitor temperature, vibration or moisture – to prevent breakdowns, fires and water damage, believes Mr Lebovitz. FM Global is looking at ways to use industrial building management systems to prevent losses, and has been working with a technology company to prevent water damage claims, one of the most frequent forms of loss. According to Mr Lebovitz, the insurer is actively looking for ways to use technology to help policyholders manage risk and prevent losses, and is interested in working with clients on solutions. “Innovation has to be for the client’s benefit,” he said. Mr Lebovitz sees a role for AI in sifting through risk data and supporting FM Global’s 1,800-strong team of risk engineers. “Algorithms and data will become a competitive advantage for some insurers. FM uses a lot of structured data within its analytics process, creating value for clients, while the value of unstructured data can be unlocked using natural language processing, providing insights. This is an area of huge potential,” he said. AXA XL is also using AI to support risk engineers. “We will continue to need risk experts but they will have more tools and data at their disposal. We are already using AI to read risk engineering reports and provide a traffic-light system of risk indicators, which helps us identify issues and focus our attention,” said Ms Stanway. She added that there is an opportunity to create an “ecosystem” of insurance and risk services, using data and technology to monitor risks and alert risk managers when action may be required. Connected sensors are increasingly embedded into buildings, plant and machinery, and the data these produce can be used for risk management and insurance purposes, she explained. “Technology will enable insurers to develop new risk management services. This is our natural home. However, while IoT is increasingly incorporated into assets for maintenance and performance, companies do not always think of risk. Data used for efficiency and maintenance can often also be used for risk management and loss prevention. But we have yet to see the widespread connection of IoT, risk and insurance,” she said. Insurers are likely to change their offering, in particular for large companies that have the balance sheets to retain risk, according to Mr Lebovitz. “Over time we will see a shift from risk transfer to risk management. The management of risk and loss prevention will be more of a focus and technology will enable this. But it will take time,” he said. The provision of risk management services will require changes in the relationship between insurers and their large corporate customers, added Ms Stanway. For example, IoT could allow for real-time insurance and eliminate the need for an annual renewal. However, policyholders would need to be prepared to provide insurers with their data, she said. “Clients are understandably cautious about being connected to insurers and some fear that it may result in higher premiums. But actually we are looking to make risks better and charge premiums that are commensurate with the risk,” explained Ms Stanway.

Insurers launch artificial intelligence of things (AIoT) risk management solutions

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