As rapid technological advances reshape the insurance landscape, insurers are encouraged to adopt technologies to enhance customer service, create better solutions for operational efficiency, and build ever more accurate underwriting models. Artificial Intelligence (AI) holds a promise in this regard as the technology has proven to be successful across several industry verticals already. Insurers are using AI to provide better, faster, and cheaper services to their customers.
At its simplest, AI is a set of computerized tools designed to achieve objectives that usually require human intelligence. There are many more subsets of AI such as,
- Machine learning which involves training computers to identify patterns in data and/or predict outcomes.
- Deep learning which is an application of machine learning where a model can analyze and draw conclusions from data, and solve problems without being trained or given explicit instructions or frameworks.
- Neural networks which are nothing but algorithms designed to mimic the human brain and recognize patterns in data.
- Natural language processing (NLP) that helps computers to understand, interpret, and respond in written text or speech.
The need for AI in insurance
Insurance is an old and highly regulated industry. Perhaps because of this, insurance companies have been slower to embrace technological change compared to other industries. AI and its related technologies as mentioned above will have a seismic impact on all aspects of the insurance industry, from distribution to underwriting and pricing to claims.
Let’s take a look at the important use cases of AI in Insurance industry
- Application/Claims Processing: Insurers need to process high volumes of data in the form of documents to extract relevant customer information in their claim or application processing. This is not only a low-skill, repetitive task but is also prone to errors. AI can automate these mundane processes and help insurers process documents rapidly enabling them to save time as well as cost. The bots can review the claim, verify policy details, check for fraud and process payments, making the claims process faster and efficient.
- Fraud Detection: With the help of AI, insurers can analyze historical data and identify a set of patterns, which can be used to detect frauds at an early stage and prevent them from happening. The technology also helps to deep dive into a sea of data and unlock hidden insights that can be useful for the business in several ways.
- Insurance Pricing: AI can assess customers’ risk profiles based on available data such as lab testing, biometric, claim history, health records etc., which helps them to arrive at the optimal insurance plan along with the pricing. This would decrease the workflow in business operations, reduce costs and thereby improving customer satisfaction.
- Lead Management: AI can assist marketers and salespeople in pointing out leads by extracting valuable insights from the prospects’ data. Insurers can gain a competitive advantage by tracking leads and managing them with an AI-enabled solution. AI can also help enrich data with information collected from social channels or weblog streams.
- Customer Service: AI-enabled chatbots are replacing human assistants to deliver always available, fast and efficient customer service. The bots allow users to interact directly with insurers using their own words making it a human-like conversation. They can be used to automatically provide the desired information, facilitate a purchase or a claim and help to connect customers to the other services or information that they need, 24×7.
- Marketing: Using AI, insurance agents gain detailed insights about the customers including demographics, interests, buying behavior etc. This information can be used by the insurer to engage customers in their context and up-sell or cross-sell depending on their needs. This helps insurers to tap more opportunities and generate more revenue.
5 key benefits of AI in Insurance
- Faster processing
- Reduced errors
- Decreased costs
- Optimized contracts
- Enhanced customer satisfaction
Wrapping up: Think big, start small
AI is transforming the insurance industry for real, however we are far from experiencing the true power of AI and ML. The insurance industry will continue to evolve as the innovations with regards to AI and ML get better and create more solutions to streamline operations. With customers embracing digital at a faster pace, insurance companies need to step up and transform their processes with cutting-edge technologies such as AI as it can provide incremental lift to the business. However, considering the vast volume of data and regulatory compliance related issues, insurers can start small to begin with. In the long run, insurers that can successfully operationalize AI and ML will be best placed to achieve a definitive competitive advantage.