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6 Hartford Business Journal • December 10, 2018 • www.HartfordBusiness.com Reporter's Notebook Matt Pilon | mpilon@HartfordBusiness.com Health Care/Bioscience, Startups & Entrepreneurs, Government/Law and Energy TECHNOLOGY Big insurers see opportunities, risks with AI, related tech S pend some time at an insurance indus- try conference and you're likely to hear the term "artificial intelligence" or "AI" mentioned a lot. AI itself isn't new — computers were beating humans at checkers around 1960 — but the technology has come a long way since then. Insurers are already using AI-enabled chatbots to interact with their customers, and programs that can assess property damage through aerial or mobile photos to help speed up the claims process. However, there are many more AI-enabled possibilities to explore, according to Anand Rao, global artificial intelligence leader for PricewaterhouseCoopers (PwC), who moderat- ed a panel discussion on the topic at the recent annual Insurance Market Summit in Hartford. "The technology is still nascent," Rao said. "But I think experimentation should be a part of the DNA [for insurers]." Panelist Jonathan Bennett, chief financial offi- cer and head of strategy for property & casualty and group benefits at The Hartford, said insur- ers have just begun to scratch the surface on how best to use AI and related technologies (like machine learning, deep learning and natural language processing) to make their operations more efficient and profitable and enhance cus- tomer relations. Those tools can help process and analyze huge datasets, with the potential to find new insights and patterns, make more accurate predictions about customer behavior and claims, and even help identify new business models for insurers. For Bennett, one area where AI holds promise is in analyzing the vast amounts of communi- cations between his company and customers. "Anything that can read and help us to under- stand what's been sent, how you can process that more effectively, make decisions before somebody needs to be involved to handle it, those are things that clearly add value and I think still have a lot of runway in front of them," Bennett said. Panelist Santhosh Keshavan, chief information officer of Voya Financial, said his company is ex- ploring the latest in voice and sentiment analysis, particularly as consumers increasingly use smart speakers like the Amazon Alexa to shop for prod- ucts, including insurance policies. Henna Karna, chief data officer at AXA XL, said the best use of AI is to enhance interactions and relationships with customers. "If our data and tools allow us to do that, then it becomes a higher priority … ," Karna said. While there are opportunities to use and help de- velop AI, there are plenty of risks too, said Rao, who showed a slide summarizing them. They range from cybersecurity and privacy concerns to the more futuristic (and scary) potential for AI weap- ons, drone swarms or systems that "go rogue." One nearer-term concern for insurers is how their employees react to efforts to vet and implement new automation in the workplace. Karna said she's seen employee skepticism, and thinks how management communicates its technology efforts is important. "It's not about sunsetting jobs or specific workstreams, it's about 'how should we be operating in five years?' " she said. "We're not replacing any of it. We want to do it better." Bennett said there can be cynicism when management has "irrational exuberance" about what AI and other technologies can do for the business, while not recognizing how much work needs to go into assessing those tools, some of which may not pan out. "Not just because people are concerned about what it may mean to their job, but because they don't believe it can account for all the complexi- ties that they face day to day," he said. GOVERNMENT CEO-led commission shifts thinking on sales tax, tolls E ight months after re- leasing its recommen- dations for improving Connecticut's economy and finances, the Commission on Fiscal Stability and Economic Growth returned recently with a pared down, follow-up report targeted at the up- coming legislative session. A close read reveals some position shifts of the com- mission, which disbanded as a public entity after its initial report, but has continued on as a private think tank. Perhaps the biggest shifts are in sales tax and tolling policies. In both instances, the commission's posi- tions are now more closely aligned to those of Gov.- elect Ned Lamont. The commission initially called for a hike in the sales tax rate, from 6.35 percent to 7.25 percent, adding an estimated $1 billion in rev- enue. (Lamont has said he doesn't intend to raise any major tax rates.) The rate increase was eliminated in the new report, which still calls for relying more heavily on the sales tax, just not through a rate hike. "Moving toward a heavier reliance on the sales tax does not, however, require higher rates. It can be achieved in- stead by broadening the tax base," the report said. That would mean greater efforts to collect inter- net sales taxes, as well as eliminating exemptions for things like groceries, park- ing or dry-cleaning services. Companies also get sales tax exemptions, such as on raw materials, tools, ma- chinery and equipment. The commission didn't say exactly which exemp- tions it would target, but called for finding $607 mil- lion in new revenue. On tolls, the commis- sion previously called for "creation of tolls on major highways." Its revised posi- tion is narrower, supporting congestion-management tolls on certain highways. "We are proposing toll-like user fees collected only from those who use the affected portion of the highway in question," the new report said. "This would not be a state- wide system of tolls, which has so inflamed the public debate, but a project financ- ing revenue bond vehicle." While Gov. Dannel P. Mal- loy has advocated for broad highway tolls, Lamont says he wants to toll only tractor-trailer trucks. Finally, the commission no longer supports allowing towns to levy a 0.5 percent local option sales tax, saying it "could lead to relatively poorer cities and towns further jeopardizing their business growth prospects in favor of their richer neigh- bors." However, the commis- sion continues to support higher municipal charges and fees, as well as "service fees in lieu of taxes" (SILOTs) on certain nonprofits. Retired CEOs Robert Patricelli (left) Jim Smith (right) co-chair the Commission on Fiscal Stability and Economic Growth. Insurance execs discussed evolving technology at the 2018 Insurance Market Summit. They included (from left) moderator Anand Rao and panelists Jonathan Bennett, Henna Karna and Santhosh Keshavan. HBJ PHOTO | MATT PILON PHOTO | HBJ FILE