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January 3, 2017updated 13 Apr 2017 8:23am

Japanese insurer to cut staff with AI system

Japan’s Fukoku Mutual Life Insurance reportedly plans to reduce the headcount in its payment assessment department by introducing an artificial intelligence (AI) system to improve operating efficiency.

By Ronan Mccaughey

Japan’s Fukoku Mutual Life Insurance reportedly plans to reduce the headcount in its payment assessment department by introducing an artificial intelligence (AI) system to improve operating efficiency.

The insurer will introduce an AI system based on IBM Japan’s Watson, which according to IBM is a "cognitive technology that can think like a human," and can analyze and interpret data, including unstructured text, images, audio and video.

The Mainichi newspaper reported that the Japanese insurer’s AI system will be tasked with reading medical certificates written by doctors and other documents to collect information necessary for making payouts, such as medical histories, length of hospital stays, and surgical procedure names.

In addition to determining payment amounts, it is said the system will be able to check customers' cases against their insurance contracts to find any special coverage clauses — a measure expected to prevent payment oversights.

The type of payments the AI system is reportedly expected to oversee at Fukoku Mutual totalled some 132,000 cases in the fiscal year 2015.

AI costs

Fukoku Mutual Life Insurance will reportedly spend about 200m yen ($1.7m) to install the AI system, and maintenance is expected to cost about 15m yen annually.

It is said that Fukoku Mutual will save about 140 million yen per year by cutting 34 staff.

According to the Mainichi newspaper, Fukoku Mutual has begun staff reductions in preparation for the AI system's installation. In total, it is reported that 34 people are expected to be made redundant by the end of March 2017, primarily from a pool of 47 workers on about five-year contracts.

The company is also said to be planning to let a number of the contracts run out their term and will not renew them or seek replacements.

AI usage in Japan

Dai-ichi Life Insurance Co. is already reportedly using a Watson system to process payment assessments, but alongside human checks, and it appears there have been no major staff cuts.

Japan Post Insurance is also said to be looking to install a Watson AI system for the same duties, and is set to start a trial run in March 2017.

Meanwhile, Nippon Life Insurance has reportedly begun using an AI system to analyse the best coverage plans for individual customers, based on approximately 40m insurance contracts held by its various salespeople.

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