
Insurance firm to replace human workers with AI system - sjreese
http://mainichi.jp/english/articles/20161230/p2a/00m/0na/005000c
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new299
I have no information on this, but the cynic in me thinks this is likely a
total non-story/spin. I find it unlikely anyone would be so confident a AI
system that they are "planning to introduce" that they'd schedule staff cuts.

What's more likely is that staff cuts were already planned. This puts a great
spin on a (I would guess most likely free/cheap) experimental deployment of
Watson.

~~~
rasz_pl
This is a non story because insurance (and banking) replaced human workers
with expert systems a looong time ago.

~~~
ecopoesis
That's just not true. Source: my sister is a commercial underwriter at a large
US insurance company. And while they do have software that gives a suggestion
for a premium, it does not know enough to be accurate, so she has to always
adjust it.

This is definitely an industry where more automation could easily be done, but
the big insurers are a conservative, risk adverse group.

~~~
mysterydip
Not to marginalize your sister's job, but couldn't that essentially be
training for an "AI system" (NN or otherwise), and over time it will reach
similar conclusions with increasing accuracy? Maybe they're doing that at her
work already behind the scenes.

~~~
ecopoesis
An AI system could probably get close, but the act of capturing all the
variables might cost the insurance companies more then the current system,
which involves a lot of 'gut feelings' about what is important or not for a
policy.

There is also licensing involved, in my sister's case she had to earn a CPCU
before she could do here job on her own.

~~~
forgetsusername
> _which involves a lot of 'gut feelings' about what is important or not for a
> policy._

Edit: I see you answered this same question below. Whoops.

Can you give some examples?

I thought it's pretty well understood that the "gut feelings" of experts have
been and will continue to be outperformed by algorithms for these sorts of
tasks. My imagination is failing trying to come up with something data-based
that an agent would see and a computer couldn't.

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mooreds
I would love a 6 month or 1 year follow up story on the success or failure of
such initiatives. Hearing about the plans of a company to implement a massive
software system that affects core business processes is akin to hearing about
the plans of someone to change a habit--things often work out as planned, but
also can fail miserably.

~~~
bryanrasmussen
I thought the studies showed that changing habits and implementing massive
software systems tend to fail?

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mooreds
Ha, I guess I was giving the benefit of the doubt.

Certainly you hear more about the failures, but that be because they get
better press. Not sure about any studies, would love to see a link or two if
you have them lying around.

~~~
bryanrasmussen
probably just my having soaked in the conventional wisdom, looked around
quickly found the following
[http://www.umsl.edu/~sauterv/analysis/6840_f03_papers/frese/](http://www.umsl.edu/~sauterv/analysis/6840_f03_papers/frese/)

quotes:

At companies that aren’t among the top 25% of technology users, three out of
10 IT projects fail on average.

AND

On average, about 70% of all IT-related projects fail to meet their
objectives.” In this case Lewis includes not only projects that were abandoned
(failed), but also those that were defectively completed due to cost overruns,
time overruns, or did not provide all of the functionality that was originally
promised.

The difference between failure in the two quotes is that the first one seems
to consider failure as just abandoned completely as being unachievable.
Whereas the second also considers failure as not having achieved all goals.

It seems to me that if the project is big and central enough to a company's
processes that it might be worth betting against the survival of that company.

~~~
Spooky23
The bottom 50% have no idea because they have no consistent objectives.

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dclowd9901
With AI starting to actually supplant jobs, something sad has just occurred to
me:

I foresee our (the US) government (and probably others) restricting the
development and deployment of AI systems that would supplant human jobs,
merely for the sake of ensuring people are employed.

I think it's sad because it would present a real opportunity to advance our
society significantly.

~~~
maverick_iceman
Based on our past history it seems unlikely to happen. Any country which
institutes such policies risks falling behind. Also who wants to be branded a
Luddite?

~~~
ryanx435
The lesson you should be taking away from the luddites is not just that they
didn't foresee that there were long term benefits to the technology, but that
they violently opposed the progress. The potential for violence is the lesson.
Get rI'd of large portions of the popukation's means of making a living by
replacing their jobs with ai and there will be violence.

The process of replacing jobs with ai needs to go slow enough that the risk of
large scale violence is minimized

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drcross
I have the feeling that before we put the support systems in place for
universal healthcare that you'll need a Phd to have a janitors job, and be
thankful at that.

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goda90
My wife was working for an insurance company until September. Despite being
one of the most efficient workers, and having full time coworkers retire, she
remained a temp her whole time there. In fact, they stopped hiring full time
for many positions because new software systems were in the works. Software
devs occasionally came and shadowed my wife to see how things worked. I
secretly hope their profits have been hurt by treating employees like they're
disposable, but I doubt it...

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amelius
I'm wondering what jobs, according to people on HN, are most likely to be
replaced by AI in the coming years.

~~~
SomeStupidPoint
Drivers, factory/warehouse workers (ongoing), clerks (ongoing), and
secretaries.

And Im in the crowd that doesn't think we'll see it replace all jobs in a
field -- just 60-90% of them, which causes major labor problems when talking
about common jobs.

~~~
amelius
But some jobs can perhaps be replaced by "lower-education" jobs.

As a (perhaps contrived) example, family doctors could be replaced by lab
workers, who take simple measurements, feed them into a computer, and the AI
does the rest (i.e., correlating conditions to a large number of existing
patient files, and hence referring patients to specialists).

~~~
SomeStupidPoint
To use your example:

Suppose right now, we have 1 doctor, 1 nurse, and 3 lab techs per 50 patients
per day. I think technology generally lets us do the same job with just 2
nurses and 1 lab tech. So we lose 40% of the jobs _from the higher paying
side_ and probably more like 50-75% of the pay.

In less contrived examples, I think we lose a lot of the jobs in the 25th-75th
percentile range, which is the middle classes.

So it's not that we see no jobs, it's that we see bad jobs and the elites. The
middle gets automated out, and it's starting to be faster than people can
retrain.

~~~
avz
> Suppose right now, we have 1 doctor, 1 nurse, and 3 lab techs per 50
> patients per day. I think technology generally lets us do the same job with
> just 2 nurses and 1 lab tech. So we lose 40% of the jobs from the higher
> paying side and probably more like 50-75% of the pay.

You're making the extreme assumption that the amount of medical care demanded
remains constant despite the fall in prices (e.g. employees: 5->3, patients:
50->50). An alternative extreme is that employment remains fixed while falling
prices improve accessibility (e.g. employees: 5->5, patients: 50->90).

In reality we may easily end up somewhere in between (e.g. employees: 5->4,
patients: 50->70). This also highlights two aspects of automation: on the dark
side, it reduces demand for work, on the bright side it improves availability
(here, of medical care). If as a society we're able to deal with the former
(e.g. by conjuring up new occupations) we stand to improve our future
significantly through the latter.

~~~
SomeStupidPoint
I agree automation increases availability. I never implied it didn't have
benefits -- just that we're likely to see the disappearance of middle class
jobs because we'll be able to fill new ones with computers _faster_ than with
people.

Even if it increases employment and availability (4 nurses, 2 techs, 100
customers), we're seeing a decrease in income provided -- 1 doctor and 1 tech
for 3 nurses. Less spread across more people.

~~~
notahacker
Unless we're positing a singularity, I don't think the public's demand for
better treatment is remotely close to satiation point, or that computerised
efficiency and accuracy will reduce the demand for nice, qualified middle-
class people to explain what the computer is recommending for them. That's
even before we've started considering whole new classes of middle class job
that mass adoption of technologies like gene sequencing could entail, or the
largely-justifiable layers of regulation and respect that give medical
professionals a lot more power to keep their jobs relevant than the average
union member

I don't think "surplus of trained doctors" is a real problem I'm likely to see
in my _lifetime_ , never mind a likely consequence of the foreseeable future
improvements in medical data collection and diagnosis.

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nvartolomei
Somehow related: [http://qz.com/799816/dutch-bank-ing-is-
replacing-5800-people...](http://qz.com/799816/dutch-bank-ing-is-
replacing-5800-people-with-machines-at-a-cost-of-2-billion/)

~~~
bkor
That's not AI, that's automation and improving their systems combined with
cutting the number of branches (as people do more online vs needing going to a
branch)

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nikolay
10 years ago we put on the market a fully automated subprime mortgage loan
underwriting system, guess which was the most frequently requested feature -
manual overriding (exceptions)!

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nikanj
Feels like many insurance companies have replaced humans with a simple
printf("No payout"). They only pay in the rare case when someone manages to
raise a social media shitstorm.

~~~
patio11
This is believed by many people on HN. It's false.

A thing you might find useful to look at: loss ratios. Loss ratio is industry
jargon for claims paid plus claims-related expense over premium income.
GEICO's, for example, is 82.1: for every $1 in premium they take in, they pay
82 cents in claims.

The industry is regulated to a degree that few are, in both the US and Japan
(and many, many other countries). If your loss ratio is too low, your friendly
neighborhood insurance regulator will not look favorably upon that fact.

~~~
cmdrfred
Did you know the original model for insurance was to get a loan for enough to
cover your clients losses and charge them premiums enough to cover the cases
where a payout is required plus the interest on the loan? To make a profit you
would invest a portion of that capitol as not everyone's house will burn down
at the same time. That all changed in 1945 when The McCarran-Ferguson Act
exempted insurance companies from antitrust law and then companies began
sharing information to set prices, now they make around 20% profit on the
premiums as well as you cited.

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congerous
Watson doesn't work. This is more IBM spin coming out via clients who want to
prove to themselves that their millions of dollars weren't wasted.

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LoSboccacc
Training output set:

Denied

Denied

Denied

Denied

Denied

Denied

...

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baboun
hello 2017

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ensiferum
Great news for the stockholders!

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noisy_boy
I wonder how long before somebody in the US senate introduces law(s) designed
to regulate impact of AI on human employment.

~~~
bawana
why can't we get AI to replace some of our government? Maybe our elected
officials wont be saying stupid things? Maybe lobbyists wont be able to buy
influence?

~~~
maverick_iceman
We'll use Bernie Sanders and Ted Cruz as training set.

