Saynara, Humans: Japanese Company Replaces Its Workers with AI

by David Ryan Polgar, bigthink.com

January 8, 2017

34 workers at a Japanese insurance company are being laid off and replaced
with an artificial intelligence (AI) system. Fukoku Mutual Life Insurance, seeking
greater efficiency in calculating their payouts to policyholders, will soon replace many of its
office workers with an AI system based on IBM's Watson Explorer ("a cognitive technology
that can think like a human").
In a recent press release, Fukoku Mutual Life Insurance stated an expected increase in
productivity by 30% from their "Diagnostic document assessment automatic coding
system."
The AI system will be used to read and understand medical certificates, hospital stays,
surgical procedures, and medical history to make a more accurate assessment of payouts.
According to reporting from the Guardian, the company will see a return on investment in
less than two years. In a small concession for human workers, the payouts will
not be finalized until approved by a non-AI staffer.

Humans being replaced by machines or artificial intelligence may tap into a deep economic
and existential fear we have about a future with high efficiency but not enough
employment. Singularity may be near, but how near?
The announcement by Fukoku Mutual falls on the heels of another Japanese insurance
company, Dai-Ichi Life Insurance, having introduced a Watson-based system to assess
payments. While the implementation of Watson's technology for Dai-Ichi Life Insurance
did not coincide with a layoff of employees, it showcases the willingness of Japanese
companies to push forward with implementing new technology that may have profound
implications for their future workforce and economy.
Why Japan?
While Japan's population currently stands at around 127 million people, the UN has
projected that its population will shrink to around 83 million by the year 2100. 35% of
Japan's people will be over the age of 65.

In Japan, increasing automation and the use of AI in the workforce may

successfully address its potentially unstoppable aging and shrinking
population. Japan's population imbalance has, for example, prompted its embrace of
developing and utilizing carebots for the elderly in order to alleviate a severe shortage in
human caregivers.
Most other countries in the world do not have the same future population problem that
Japan has. The United States currently has a population of around 319 million, which is
projected by the UN to increase to 450 million by 2100. The great underlying debate is
whether AI's efficiencies that lead to layoffs will be offset by the creation of new jobs
opportunities and industries not yet existing.

In the short-term, most of us have one major question: Can I be replaced? A recent
report by McKinsey took an extensive look into the likelihood that automation would
replace or highly augment certain careers now and in the near future. The report stated:

"While automation will eliminate very few occupations entirely in the next decade, it will
affect portions of almost all jobs to a greater or lesser degree, depending on the type of
work they entail. Automation, now going beyond routine manufacturing activities, has
the potential, at least with regard to its technical feasibility, to transform sectors such as
healthcare and finance, which involve a substantial share of knowledge work."
The Nomura Research Institute has predicted that nearly half of Japan's jobs could be
replaced by robots by the year 2035. Led by researcher Yumi Wakao and Oxford University
Professor Michael Osborne, the NRI also predicted that 47% of American jobs
could be automated and 35% in the UK by 2035.
Speaking to Engadget in December 2015, Yumi Wakao points out a very crucial caveat to
the prediction: "[T]his is only a hypothetical technical calculation. It doesn't take into
account social factors.

Only time will tell how we react in the Fourth Industrial Revolution.