How AI is Changing the Insurance Industry

How AI is Changing the Insurance Industry

Artificial Intelligence (AI) is all around us, from personal assistants to smart cars and smart home devices and streaming services. AI helps us drive cars, recommends the movies and TV shows to watch, and answers our everyday questions.

But that is just the proverbial tip of the iceberg. Machine learning (ML) and AI are made to deal with vast amounts of information, popularly referred to as “big data.” No business handles as much data as insurance does. That is why AI for insurance is a great idea.

Here is how AI is changing the insurance industry.

Fewer human errors

One of the most practical use cases of AI and cognitive learning technology is improving data accuracy and reducing manual errors associated with human input.

AI applications can be used to identify bad data from application processing, which reduces overpricing, automates application processing, and reduces human errors in data entry. It can also create efficiency by analyzing large quantities of data to do things like identify claims disputes where an attorney would be necessary.

Technology like AI and machine learning, if appropriately implemented, can free up humans from routine tasks like data entry to focus on the more high-touch and value-added aspects of customer service.

Faster claims processing

Insurers invest in AI to transform the customer experience by freeing up experienced claims staff to focus on customers and making the process as frictionless, quick, and painless as possible. Add in the benefits of more accurate settlements, reduced loss adjustment expense, and more sophisticated fraud and subrogation detection. It’s easy to see how AI can help make this a more streamlined process.

It is not a stretch to imagine a future in which you have a car accident, and the car reports the claim for you. The sensors in your car will tell your insurer the nature of the damage and even how much the repairs will cost. Your insurer can then arrange a mechanic to start the repairs straight away.

Similarly, if something goes wrong at home, such as a water leak, sensors connected to the internet can switch the water off remotely, minimizing damage and reducing the cost of a claim.

With the proper synergy of different forms of AI, the sky’s the limit.

Advanced personalization capabilities

AI has the power to facilitate the creation of smarter and more personalized product offerings. It can deploy rates tailored to consumers’ financial circumstances and preferences. This is especially important if you know that personalization is one of five expanding tech trends.

Based on consumers’ inputs, virtual agents can also segment them into different categories depending on factors such as age, risk, income group, job stability, and so on. They also help capture the full context of a potential consumer’s requirements. The data generated in the process proves instrumental in lead profiling, assisting the sales teams achieve better conversion rates.

Document processing

person writing on papersInsurance companies need to generate high volumes of documents, including specific information about the insurer. While creating these documents manually consumes time and is prone to errors, using AI and automation technologies can generate policy statements without mistakes.

The same holds true for application processing. Document capturing technologies enable insurance companies to automatically extract relevant data from application documents and accelerate insurance application processes with fewer errors and improved customer satisfaction.

Help with policy research

AI insurance solutions can be leveraged here to assist consumers in their life insurance policy research through e-offerings. Given the complex nature of insurance products, most users struggle to make sense of the details of a policy they may be interested in.

This can be addressed by facilitating interactive Q&A sessions between users and virtual agents, with the help of conversational AI solutions. Once their doubts and concerns have been addressed, these virtual agents can guide customers through the purchase process eliminating the need to navigate a menu and taking them straight to the desired product.

Keeping up with trends

Another area insurance companies are using AI is to inform their product and policy design.

By streamlining and speeding up the collection and analysis of massive data from their own channels, third-party sources, and agents, insurers can use machine learning to discover customer trends and interests in real-time. These insights are then being used to develop and improve product and policy design.

Fraud prevention

To combat fraud, insurers are using AI-driven predictive analytics software to process thousands of claims each month. By analyzing the claims in milliseconds based on set rules and indicators, AI can identify claims which may not be legitimate, reducing the number of fraudulent claims slipping through. These indicators include things such as frequency of claims, past behavior, and credit score.

If you keep in mind that roughly one in five insurance claims turns out to be false, it is easy to see how AI can save you both time and money.

Insurance advice

Customer satisfaction is expected to be higher when machine learning algorithms are deployed. They can provide personalized services and recommendations for insurance products that are best for that specific customer based on his/her profile and previous behaviors of other consumers who share similar experiences and personalized information.

Efficient AI techniques such as clustering and classification can be deployed to give advice that will work for a given customer using tailored tools and products.

For example, AI-based clustering techniques can learn that a given customer is classified with a specific group of consumers of a certain age bracket, gender, geographic location, etc. Such a customer is most likely interested in a new insurance product based on the known responses and preferences of other consumers belonging to the same cluster.

Conclusion

AI is no longer science fiction  – insurers are already using automation and AI to collect and standardize data and work more efficiently and productively.

For customers, AI can help reduce insurance costs for the commercial and business consumer and help expedite claims and policy renewals. Better access to more accurate data helps both provider and customer have the best possible experience. Used the right way, AI and related technology can help insurers serve customers better, mitigate risk and improve their bottom line.

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