Robots replace staff at Japanese insurance firm

Japanese insurance company Fukoku Mutual Life Insurance replaces 34 members of its claims assessment team with IBM Watson

Artificial intelligence (AI) is replacing people that carry out payment assessments at a Japanese insurance company in the latest example of the increasing use of software robots in the financial services sector.

According to Japanese publication The Mainichi, Fukoku Mutual Life Insurance is replacing more than 30 staff by using IBM Watson cognitive computing software to read medical documents that are used to assess payments. The robots will calculate payment amounts but final decisions will continue to be made by a human.

The insurance firm will spend around £1.4m to install the IBM system, and maintenance is expected to cost around £100,000 a year. The company expects to cut costs by almost £1m through a reduction of 30% of the staff in the department.

AI is making headway in the financial services market despite the sensitive nature of the sector. For example, in October 2016, SEB in Sweden was the first bank to use IPsoft’s cognitive technology for customer services after it proved successful in an internal IT service desk project.

The software robot known as Amelia, which was launched in 2014, has an understanding of the semantics of language and can learn to solve business process queries like a human. It can read 300 pages in 30 seconds and learn through experience by observing the interactions between human agents and customers. 

If Amelia cannot answer a question, it passes the query on to a human, but remains in the conversation to learn how to solve similar issues in future. It understands 20 languages, as well as context, and can apply logic and infer implications.

It is not just the financial service sector jobs market being transformed by technologies such as AI and automation. According to Deloitte, all sectors of the UK economy will be affected by automation in the next 20 years, with 74% of jobs in transportation and storage, 59% of jobs in wholesale and retail, and 56% of jobs in manufacturing having a high chance of being automated.

The research by Deloitte found that around 16% of total public sector jobs in the UK could be automated by 2030 as automation technology evolves while public sector budgets recede.

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If I'm reading this correctly, Fukoku Mutual Life will see break even in a short 140 years......  That's if you don't count the annual maintenance fees......  
Either of 2 things should happen. 1) The author needs to correct the financial numbers provided in the article and admit an error. Or 2) Management needs to be fired and stockholders, if this is a public company should run fast.
Yes sorry  - now corrected £1.4m.
This cannot make sense.
"The insurance firm will spend around £140m to install the IBM system, and maintenance is expected to cost around £100,000 a year. The company expects to cut costs by almost £1m through a reduction of 30% of the staff in the department." My highlighting.

So they plan to spend £140m to save £1m a year resulting in  taking them 140 years to recover their initial investment.

Am I a bit slow, have I missed something or have the laws of investment returns been turned upside down in Japan?
Answers on a postcard please.

P.S. IBM salesperson commission cheque must look really good.

Sorry I made a mistake - cost is £1.4m. Combination of converting and my poor maths. Niw corrected. Might take some ti me to update.
Isn't the power of the crowd great?
Absolutely. Thousands of editors.
Decimal pointitis strikes again eh :-) :-) :-).
Being a human I actually liked the original numbers better.  With the corrected figures ROI is down to ~ 1.5 years with maintenance costs rolled in.  I've always felt that actuaries and accountants were doomed for extinction......
Overrated even.
It will get scary when the final decision is also made by a robot. "Sorry Dave I can't do that."
Ah yes indeed - robot ethics.

You'll need to mash up a new article on that there now.
I feel a news analysis on the subject could be in the pipeline.

Defining who and what the criteria to be used when the robot says no will be an interesting topic.

After all you would not want to have the Samsung smart phone equivalent - buy a smart phone and we'll throw in a fire for free - to be in the ethics decision tree now would we?