b'Technology | Technology TransactionsDespite being competitors in some cases, theseCompanies who successfully integrate AI to avoid collaboration deals have the potential to bringthese claims can create significant competitive significant benefits to both parties. The incumbentadvantages over other industry players. gains access to an entirely new, digital channelAI is also changing the way insurers interact with without the time or monetary investment requiredcustomers through the use of new AI-driven tools to build that digital channel itself. This new channellike chatbots. Progressive Insurance, for example, can expand the reach of the incumbent, introduc- has developed its Flo Chatbot to help customers file ing it to a broader range of customers than it wouldclaims, get auto insurance quotes and answer general be able to do on its own. The insurtech companyquestions all through Facebook Messenger. shares in this upside and may need to partner withCompetitors Allstate and GEICO have also both the incumbent to offer new types of products ordeveloped chatbots to provide similar services. These insurance policies to its own customers. Since thesetools have the advantage of being available 24/7 and deals involve an insurtech company who is not onlycan free up significant time and resources for insurers a service provider, but also a collaborator with itsto devote towards more profitable activities. own customer relationships to protect, particular care and thought needs to be exercised whenWhile AI can deliver insights and significant opera-incorporating a deal of this type into your compa- tional improvements to a company, its nys overall digital transformation strategy.implementation continues to face challenges. Some challenges include uncertainty in intellectual Continued Adoption of AI property rights surrounding AI developments, With cloud-based storage resulting in exponentialdetermination of the necessary contractual alloca-reductions in the cost of storing data and exponen- tion of rights and obligations between licensors, tial growth in the ability to process data, insurerslicensees and the end users of the AI, and legal and producers continue to adopt AI as a way tocompliance in the use of AI, such as being able to make business processes more efficient and toexplain the logical and algorithmic decisions and solve problems faster. AI is currently being used inoutputs produced by the AI to ensure its decisions the insurance industry to, among other things,comply with legal and regulatory obligations. more accurately price policies, recommend usefulInsurers and producers who recognize and address products to customers, recognize and reducethese challenges early in their AI adoption stand to fraudulent claims and improve claim processingmaximize the value of their investment and reduce time. The FBI estimates the total cost of insurancetheir risks. [See Insurtech Regulatory Developments fraud (non-health insurance) in the US at over $40for further information on the NAIC adopting guiding billion per year alone, the cost of which is passedprinciples on AI]. g on to consumers through higher premiums. 100 GLOBAL INSURANCE INDUSTRY|YEAR IN REVIEW 2020'