The power of AI to disrupt the insurance industry

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Welcome to The Menu Magic - Finance & AI newsletter

Every week, we will deliver expert insights, in-depth analysis, and curated content to your inbox, helping you navigate the rapidly evolving landscape of AI in finance.

In today’s email:

• The power of AI to disrupt the insurance industry

• Custom Made ChatGPT in under 1 hour with your own data

• Threads net (Meta´s Twitter competitor) will cease to exist in less than 12 months

I hope this message finds you well. Recently, I've been examining a piece by Joe Schmidt, a fintech partner at a16z, discussing the application of generative AI in the insurance sector. He describes an industry that could soon be reshaped by AI, prompting me to consider some potential business models. So, let's dive into it.

Firstly, one potential business model could be an AI-Assisted Underwriting Consultancy. Here's the concept: we utilize large language models (LLMs) to provide advanced underwriting services to insurance companies. By deploying LLMs to process vast amounts of data, we can offer precise risk assessments. This could be especially valuable in complex areas like commercial and life insurance. We'd handle the majority of the data analysis, allowing human underwriters to concentrate on the decision-making process, using the key insights we've extracted for them. Insurance companies could then navigate these complex areas with more confidence, knowing they have an expert (albeit artificial) on their team. This could reduce underwriting time and increase accuracy, potentially helping companies manage their loss ratios.

Secondly, we could consider an AI-Powered Insurance Brokerage. In this model, we'd develop an online platform with an LLM trained in various insurance policies and customer data. This AI 'broker' could then answer intricate questions about which policies customers should buy, offering personalized advice to fit their unique needs. This service would be available 24/7 and could simplify purchasing complex insurance products as easily as online shopping.

So, there you have it, two business models harnessing the power of AI, ready to disrupt the insurance industry. I look forward to hearing your thoughts on these ideas, and it's worth noting, they are just a starting point. With the rapid advancements in AI, the potential for further innovation is enormous.

As always, keep your curiosity alive and keep pushing the innovation envelope! If you want to read the original piece click here

Now,

Imagine this - your personal LLM chat system, completely custom-made. Doesn't it sound intriguing? You can train it with your data and once it's up and running, it's all yours to converse with, just like how you'd use ChatGPT. A neat concept, don't you think? Let's dig in and find out how you can bring this idea to life

What do you think?

RIP Facebook Threads

Hey there,

In just 72 hours, the new social media platform Threas saw an astonishing influx of 100 million users, turning heads across the digital world. Seems like everyone's buzzing with excitement about the potential showdown between Mark Zuckerberg and Elon Musk, but this time in the realm of social media, not in the boxing ring.

However, a particular analyst predicts a different outcome. He forecasts that Threads, the latest venture from Meta, will vanish from the social media landscape within a year. A bold claim, don't you think?

As the digital world continues to buzz about Mark Zuckerberg's latest app, Threads, many anticipate it to be a formidable competitor to Twitter. However, it may not be quite the "Twitter killer" that everyone is imagining. In fact, it could disappear entirely within 12 months. Here's why:

Sensing an Opportunity

To understand why Zuckerberg is targeting Twitter now, it's important to evaluate the perceived vulnerabilities of Twitter. These include distaste among brands, journalists, and media outlets for Elon Musk's politics, recent technical issues, and constraints due to Twitter's debt. Zuckerberg likely sees an opportunity to not only chip away at Twitter's user base but also to:

- Increase brand reliance on the Meta app ecosystem

- Create a new channel for brand advertising on Threads

- Gather more text-based data to enhance Meta's AI models

However, while these advantages might seem compelling, Threads is a high-risk venture for Meta.

High Risk, Limited Reward

Threads are, in essence, a negatively asymmetric bet for Meta. In the best-case scenario, should Threads completely take over Twitter's market share, it would contribute an estimated incremental $4-6 billion in revenue. Considering Meta's total revenue in 2022 was nearly $120 billion, this translates to a mere 4% increase - a limited upside, especially given the potential downside.

Threads' user base is expected to be seeded from Instagram's users, which poses a threat to Instagram's engagement. Instagram, dubbed Meta's "golden goose," is projected to generate upwards of $50 billion by the end of 2023. Therefore, even a slight decrease in Instagram usage could negate any potential revenue benefits gained from Threads.

Therefore, Meta's focus on Threads' user numbers may be misguided. Instead, the focus should be on retaining Instagram's session numbers.

Threads' Key Shortcomings

One key flaw in the Threads strategy is its reliance on Instagram's existing social graph for engagement. For Threads to thrive, it must appeal to Twitter's user base.

Twitter has, over the years, fostered a platform that serves and enables conversations for various niche segments and topics not usually addressed by other platforms, such as intellectual content, anonymous accounts, adult creators, and politics/news. To truly compete, Threads would need to cater to these segments.

However, the head of Instagram and Threads has stated that they will not support this type of content, and are even actively working against it. Therefore, it is highly likely that:

- Threads, seeded with Instagram users, will quickly see declining engagement

- Attempts to attract Twitter users will fail ( I personally will not use it)

- To protect Instagram's core business, Threads will shut down within 12 months

It's not implausible to predict that Threads may eventually be integrated back into Instagram as a feature, much like Stories and Reels, becoming yet another project sunsetted by a project manager.

The Real Winner?

Despite this prognosis, Zuckerberg may still consider Threads a success, albeit for a different reason. The real objective behind launching Threads could be to gather more text-based content to train Meta's AI models on.

While the future of Threads remains to be seen, one thing is clear: it's a high-stakes game that could drastically reshape the landscape of social media. But the question now is: do you agree with his prediction? The ball's in your court! The Twitter that inspired this article could be found here

I'd love to hear your feedback on today's newsletter! Is there a specific type of content you'd like to see more of in the future? Since I'll be releasing a new edition each week, I welcome any suggestions or requests you may have. Looking forward to hearing your thoughts!

The Menu Magic is written by Francisco Cordoba, a Fintech entrepreneur living in London.

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