Transforming The Insurance Industry With Big Data, Machine Learning And AI Posted on : Jul 07 - 2021

The business of ensuring protection from financial loss and mitigating risk is as old as human civilization. The Code of Hammurabi, King of Babylon, written in 1750-1755 B.C., specified the first provisions of what we would now know as marine insurance. In the wake of the Great Fire of London of 1666, Sir Christopher Wrenn included provisions for an “Insurance Office” in his new plan for the City of London. Today, the global insurance market is estimated to be a $5,050.31 billion industry, comprised of leading commercial life insurance, property and casualty, and health and medical insurance carriers.

It is against this backdrop that an emerging wave of “Insurtech” solutions companies are seeking to transform the business of insurance through the introduction of Big Data, Machine Learning, and AI capabilities. In a recent Harvard Business Review article, Legacy Companies Need to Become More Data Driven — Fast, my co-author Ash Gupta and I, observed, “In contrast to traditional insurance companies, which have been data rich but have customarily relied on actuarial approaches, startup competitors like Lemonade and Traffk are employing machine learning analytics and drawing upon thousands of data elements to provide personalized analysis and drive insurance purchases.”

When insurance providers tap into the vast repositories of Big Data that is available to them and combine this data with machine learning and AI capabilities, they can develop new policies that can reach new audiences. An April 2021 report published by GlobalData forecast that AI platform revenues within insurance would grow by 23% to $3.4 billion between 2019 and 2024. It was in this context that I recently spoke with Paul Ford, Co-Founder and CEO of Traffk—one of the emerging Insurtech leaders that is employing Big Data, machine learning, and AI to help transform the insurance industry. Billing itself as a “Data Driven Insurance Underwriting and Distribution Platform”, the goal of Traffk from its inception has been to comprehend the risk and modernize the insurance underwriting process by leveraging modern data and analytics tools and technologies.

Paul Ford knows the insurance industry firsthand, having begun his career at Farmers Insurance before moving over to Aetna as a financial underwriter. It was while working at Aetna that Ford got his first glimpse of the future of insurance, when Aetna introduced the first consumer direct health plan (HSA). From there, Ford moved to Mercer, a unit of Marsh & McLennan, where he was engaged in the use of Big Data to transform practices that resulted in better pricing of health and wellness plans. Subsequently, Ford worked at Safeway Health on solutions to manage the escalating costs of insurance premiums, all of which led up to his launch in August 2015 of Traffk. View More