For the first time, AI-based machine health diagnostics are guaranteed by one of the world’s leading industrial reinsurance companies. This event lends credibility to the maturity of AI and IIoT-based solutions, and marks a major step for the insurance industry on its path from risk mitigation towards digitally-enabled risk prevention.
This article was orginally published on June 2, 2020.
Trusting Technology So You Can Trust Your Machines
Customers implement Machine Health for the elements that it adds to their operations. These elements include resiliency, productivity, collaboration and predictability. But underlying all this is the one element that they trust Machine Health to help remove. This element is uncertainty: namely, the risks of unexpected machine failure leading to wasted money, lost product, and even lost customers.
Ironically, to increase their ability to trust that their machines will be there when they need them, they first need to trust that our technology will be there when they need it, in the form of our AI platform. They trust that our AI will make accurate decisions, filtering out the noise from millions of data points and surfacing the right indications of risk so they can prevent failures and ensure maximum productivity from the machines that matter most to them.
Reducing Risk Further…
There’s another industry dedicated to reducing risk; one with a much longer track record. That industry is insurance. For centuries people and corporations have used insurance to mitigate the negative impacts of all sorts of risks from floods, storms and fires to car accidents and even human error.
Over time insurance has evolved, to not just give us the ability to recover from risk, but to provide the expertise needed to prevent it in the first place. HSB (Hartford Steam Boiler) was created 150 years ago based on just that insight.
HSB’s vision was to inspect steam boilers and provide the insights to keep them from failing (aka exploding), preventing damage and loss of productivity. HSB provided insurance as simply another means to reduce financial harm in the situation where failures still occurred, and add more value to their expertise in prevention.
Today those two paths, one 150 years in the making and the other only a decade old, have intersected in innovative and transformative ways. Augury is working with HSB (now part of Munich Re) to provide a guarantee for Augury’s machine health solutions.
Together Augury and HSB are bringing those two powerful capabilities –the expertise and technology to prevent failure and financial compensation for the machines that do fail– to Augury’s customers in the form of Guaranteed Diagnostics.
On its face Guaranteed Diagnostics can be seen as a terrific added benefit for Augury’s customers, in that it helps customers pay for the cost of repairing or replacing equipment monitored by Augury, in the event machines fail in ways we should have detected.
A Worldwide First: Insuring AI Decision-Making
In reality it’s far more than that. It’s a sign of the increasing trust in AI in general – being the first time in our industry that an insurance company has provided this kind of backing for the decisions made by AI. More specifically it’s a sign of the accuracy and predictability of Augury’s platform, and the significant body of evidence in the accuracy of our AI that convinced HSB to support this offering.
But most importantly, it’s a peek forward into a new future, where insurance companies and technology companies continue to partner to eliminate risk in powerful new ways, lowering costs for companies and increasing safety and security for everyone.
It’s a phenomenon happening in other industries as well. According to a study by Accenture and the Stevens Institute of Technology, the more than $225 billion insurance industry will see traditional premiums drop by $25 billion by 2035 and by $41 billion by 2050 due to the increased safety of self-driving cars.
Guaranteed Diagnostics: Defining the Future
Will the increased power of technology make insurance companies obsolete in every situation? Only the ones that don’t change. Most likely we’ll see more companies such as HSB, focused on using their tremendous data sets and deep expertise in partnership with companies such as Augury to create offerings for managing risk that start with preventing it, and end with mitigating whatever financial damages that still occur.
These new concepts will roll out in measured ways: Guaranteed Diagnostics, like most new concepts, is not yet available for all machines or all geographies. But it does provide a peek into the future of risk management, even if, to paraphrase author William Gibson, that future is not yet evenly distributed.
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