Artificial intelligence and cutting-edge data analysis software mean insurers can now make predictions about the weather, natural disasters and senile dementia that previously “only God knew,” according to the president of one of Japan’s largest insurance companies.
The bold claim from Mikio Okumura, head of Sompo Holdings, comes as the company prepares to launch Japan’s first dementia prevention insurance package – a product designed for the world’s oldest society and based on analysis of the heartbeat, Appetites and the sleep patterns of thousands of people based nursing home residents.
Sompo’s move marks the insurance industry’s latest escalation in a fight to secure an advantage through technology. Okumura said this is an area of competition that would determine the viability of individual companies as they move away from their traditional businesses.
The “god” claim follows Sompo’s $500 million investment two years ago in Palantir, the US big data analytics specialist, and its acquisition of a 22 percent stake in a Japanese AI start-up, Abeja .
“We can now reveal things that only God knew in the past, thanks to technology including AI,” Okumura said, outlining a plan for an insurance system that not only pays when symptoms of dementia appear, but also tries to delay it the outbreak of the disease by encouraging customers to change their daily behavior.
Sompo plans to use 500 records of 80,000 residents at its nursing homes, a business the company started in 2015, to create retirement plans tailored to each individual’s lifestyle. In 2020, an estimated 6.3 million people had dementia in Japan, and the number is expected to reach 11 million by 2060, accounting for nearly a third of the elderly population, according to the Cabinet Office.
Palantir’s technology has so far allowed the insurer to analyze correlations of data and build a model to suggest improvements to care plans for each resident. Okumura hoped these “big data” capabilities could now serve its core insurance business and help the company develop an insurance package that “avoids risk.”
“We will encourage our customers to change their behavior, and such a solution could be attached to health insurance for people of working age,” Okumura said. “If they manage to delay symptoms of dementia [for two or three years]we can offer them cheaper insurance.”
“This relieves the families supporting them, extends the healthy life expectancy of customers and reduces the insurance benefits of the insurer. . . This will make the national social security system more sustainable,” he added.
Sompo, like other insurers, is committed to using increasingly powerful tools to update the insurance business model for a world increasingly plagued by the impacts of climate change. Insurers around the world have been forced to grapple with a steep rise in natural catastrophe claims, with events ranging from Europe’s worst drought in 500 years this summer to devastating floods in Pakistan.
After Hurricane Ian’s devastating killing spree in Florida and South Carolina in September and October, risk modeling firm Verisk said in its initial reports that insurance companies were expecting up to $57 billion in damage due to estimated wind, storm surge and inland flood damage .
By combining historical data on damage caused by typhoons or floods with predictions of future climate changes, Okumura believes Sompo can estimate the magnitude of natural disasters and economic losses, for example, and suggest customers how to modify building structures to mitigate damage.