A future in which human workers are replaced by machines is about to become a reality at an insurance company in Japan, where more than 30 employees are being laid off and replaced with an artificial intelligence system that can calculate payouts to policyholders.
Fukoku Mutual Life Insurance believes it will increase productivity by 30% and see a return on its investment in less than two years. The firm said it would save about 140m yen (£1m) a year after the 200m yen (£1.4m) AI system is installed this month. Maintaining it will cost about 15m yen (£100k) a year.
The move is unlikely to be welcomed, however, by 34 employees who will be made redundant by the end of March.
The system is based on IBM’s Watson Explorer, which, according to the tech firm, possesses “cognitive technology that can think like a human”, enabling it to “analyse and interpret all of your data, including unstructured text, images, audio and video”.
The technology will be able to read tens of thousands of medical certificates and factor in the length of hospital stays, medical histories and any surgical procedures before calculating payouts, according to Mainichi Shimbun news.
While the use of AI will drastically reduce the time needed to calculate Fukoku Mutual’s payouts – which reportedly totalled 132,000 during the current financial year – the sums will not be paid until they have been approved by a member of staff, the newspaper said.
Japan’s shrinking, ageing population, coupled with its prowess in robot technology, makes it a prime testing ground for AI.
According to a 2015 report by the Nomura Research Institute, nearly half of all jobs in Japan could be performed by robots by 2035.
Dai-Ichi Life Insurance has already introduced a Watson-based system to assess payments – although it has not cut staff numbers – and Japan Post Insurance is interested in introducing a similar setup, the Mainichi said.
Watson is a question answering computer system capable of answering questions posed in natural language, The computer system was specifically developed to answer questions on the quiz show Jeopardy!. In 2011, Watson competed on Jeopardy! against former winners Brad Rutter and Ken Jennings. Watson received the first place prize of $1 million.
In February 2013, IBM announced that Watson software system’s first commercial application would be for utilization management decisions in lung cancer treatment at Memorial Sloan Kettering Cancer Center, New York City, in conjunction with health insurance company WellPoint. IBM Watson’s former business chief says that 90% of nurses in the field who use Watson now follow its guidance.
On January 9, 2014 IBM announced it was creating a business unit around Watson. IBM Watson Group has headquarters in New York’s Silicon Alley and will employ 2,000 people. IBM has invested $1 billion to fund the division. Watson Group will develop three new cloud-delivered services: Watson Discovery Advisor, Watson Engagement Advisor, and Watson Explorer.
Watson analyzes high volumes of data and processes information more like a human than a computer – by understanding natural language, generating hypotheses based on evidence, and learning as it goes.