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  #11  
Old 04-14-2019, 10:32 AM
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But the recent "AI" revolution seems to more be about computer models being able to detect strong signals that people have been able to detect for a long time, like image recognition. This is great for automation. It's less clear to me how much it will improve detecting much noisier signals like propensity for loss.
I'm no luddite, but there is a danger that it will pick up signals from the training data which are artifacts of said data.

Having trained a neural net, I can show you that it has lift, but I can't explain how it is making its judgement. Maybe it just picked up for the training data that "we don't insure THOSE people." In my view, that should be a real issue for regulators.
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Old 04-14-2019, 03:26 PM
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The article author gained a lot of credibility when they claimed sex was a prohibited rating variable.
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Old 04-14-2019, 03:27 PM
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  #14  
Old 04-15-2019, 04:37 AM
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A few thoughts from the UK life perspective...

The data bit is nothing new, it must be 10 or more years since I sat in my first conference session while someone told us the wonderful stuff they'll be able to do with big data. I'm not sure I understand where the AI bit comes in to it? Is it the fear that we'll give up oversight of pricing models and let computers decide?

That's starting to touch on what I think is the interesting bit. If we get more data we could (maybe, perhaps) refine our pricing down to a very precise level. And, assuming that were possible, where does that leave the industry? Do we just have a load of risks that are uninsurable, or at least can't be offered on affordable terms? Or do we have a duty to make sure people have access to the insurance they need - be that a moral issue, or a commercial one if we need the business volumes to sustain the industry?

We're starting to see this in the UK for car insurance - where young drivers are facing huge premiums and needing to get dashboard cameras and devices to measure their driving in order to get any cover. While that's manageable, and eventually they'll grow up and get appropriate premiums, it's a different issue for life insurance - if anything you become less insurable as you age. I can see using data insights to nudge policyholders towards better behaviour, but it does feel like there's a limit to how much we can subdivide risks and maintain an industry - either eveyone ends up with group cover, or the individual insurance ends up looking more like investment than protection cover.
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Old 04-15-2019, 08:31 AM
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Most mass media writers are going equate "machine learning" to A.I. since the latter literally incorporates the former.
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Old 04-15-2019, 11:25 AM
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Does this mean insurance companies are going to hire more data scientists/programmers to do pricing?
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Old 04-15-2019, 11:11 PM
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