Japanese company replaces office workers with artificial intelligence.
An insurance company has replaced almost 30 percent of its workforce with an artificial intelligence system that is capable of calculating insurance payouts and analysing a range of text and media. 34 humans will lose their jobs to the machine.
Fukoku Mutual Life Insurance believes the move will improve operating efficiency and increase productivity by 30%. The implementation of the AI system is expensive, costing 200m yen ($1.7m) to install plus a yearly running cost of 15m yen ($130,000). However, the company believes this will lead to savings of over 140m yen ($1.2m) and it will see a return on its investment in less than two years.
The system is based on IBM’s Watson Explorer, a cognitive search and content analysis platform which claims “cognitive technology that can think like a human” and can analyse and interpret all data, including unstructured text, images, audio and video, according to the tech company.
The technology will replace members of the company’s payment assessment-related department, which as of March 2015 had 131 employees.
It will have the ability to read medical certificates written by doctors and other documents, and factor in the length of hospital stays, medical histories and any surgical procedures before calculating payouts, according to Japanese newspaper Mainichi Shimbun. However, the sums will not be paid until they have been approved by a member of staff.
The aim is to reduce the time needed to calculate Fukoku Mutual’s payouts, which in fiscal year 2015 reportedly totalled 132,000 cases. However, it’s a concerning move from a firm in a country that already has a reputation for an unhealthy work-life balance, brought to life by a tragic suicide case in Japan last year at Dentsu, with overwork being suggested as a the main reason.
Fukoku Mutual is not the first to introduce AI to its ranks; Dai-Ichi Life Insurance has already introduced a Watson-based system to assess payments and Japan Post Insurance will trial a similar setup this year, the newspaper wrote. Fukoku Mutual is the first to cut staff as a result of implenting AI, however.
It’s a move that is tipped to have a domino effect on industries where administrative jobs can be done more efficiently by machines. In fact, nearly half of all jobs in Japan could be performed by robots by 2035, according to a 2015 report by the Nomura Research Institute.
More alarmingly, the World Economic Forum last year published a report that predicted the rise of robotics, AI and other technologies will result in a global loss of five million jobs by 2020.