RiskGenius Blog

Insights into our world of Insurance & Technology.

China, Insurance Regulators and AI, Oh My!

R._John_Wright_Tin_Man,_2015.png
 
This week I attended the World Economic Forum workshop on Artificial Intelligence and Financial Services in New York City. It was very surreal to be representing the insurtech world with Fractal Industries at the event. 
 
I have two big takeaways after listening to people much smarter than me prognosticate on the future. 
 

1. China is setup to eat America’s lunch when it comes to A.I. and Insurance. 

 
The reason is simple: China has much less regulation. Large companies can aggregate tons of data and use it however they want to underwrite insurance. Chinese A.I. companies in insurance do not have to worry about fifty state regulators. Imagine if Lemonade could launch its app across the entire United States with the push of a button. I am interested to see how China will eventually introduce this A.I. into the United States insurance market. 
 

2. U.S. Insurance Regulators are going to struggle mightily with A.I. 

Artificial intelligence, by its nature, is not understandable by humans. The point of artificial intelligence is that computer algorithms make determinations based on learnings that exceed anything comprehensible by the human mind. Just imagine a 1 million row, 1 million column spreadsheet. Machine learning can glean insights from this data but it can’t really explain how it does it. 
 
Insurance regulators are tasked with understanding how insurance rates and forms are structured in order to protect the public. How does that function work if Artificial Intelligence is making underwriting decisions that humans can’t comprehend? 
 
Two of my big takeaways from the World Economic Forum: explore China as a market and figure out how the heck we are going to be able to explain Johannes decision making (our super awesome algorithm that does all the work). 
 
What do you think?