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The Era of AI Insurance
AI & MI

The Era of AI Insurance

By Dipak Singh September 07, 2023 - 62 views

The era of AI is well and truly upon us and more industries are waking up to the fact, particularly in terms of the potential use cases of artificial intelligence. The insurance sector is not immune to these developments. In fact, perceptions towards deploying AI have rapidly changed in recent times.

A Genpact AI 360 report even stated that 87% of carriers invested in excess of $5 million in AI-related technologies annually. Hence, the winds of change are afoot in the insurance industry, driven by the future potential of artificial intelligence. How will things unfold, going forward? Here’s taking a closer look. 

How AI is changing the Insurance Industry

The insurance sector is truly witnessing a new era of AI, considering the innovative disruptions underway at multiple levels. AI is steadily becoming a key differentiator for insurance companies along with other technologies like RPA and blockchain in an age of higher competition and hyper-personalisation. Here are some pointers worth noting: 

  • The rise in insurtech companies has already led to massive disruption in the sector, particularly due to digital services and a more personalised ecosystem. 
  • Future consumers, especially millennials are more likely to veer towards hyper-personalised models along with usage-based insurance. 
  • With McKinsey estimating 20% of global vehicles getting advanced safety systems in the near future, personal auto insurance will undergo a paradigm shift. Premiums may come down due to better safety systems while data feeds will make it possible to customise insurance accordingly. 
  • Artificial intelligence is helping the insurance industry automate repetitive and knowledge-based tasks. 
  • It is also driving insights from bigger and more complex data sets to boost decision-making. 
  • It is also boosting parametric products and risk-based solutions.

Higher personalisation and operational efficiencies across the ecosystem are being enabled by artificial intelligence. Let us now look at the major benefits of deploying this technology as far as companies are concerned.

The Benefits of AI for Insurance Companies

There are widespread benefits for insurance companies in the era of AI. Here are some pointers that should be noted in this regard.

  • Insurers are deploying artificial intelligence to transform customer experiences through freeing up staff members to focus more on customers. 
  • It is enabling automated claims with easier processes, accurate settlements, lower loss adjusting costs, and better subrogation and fraud detection. 
  • Insurers will be able to access more crucial data while underwriting owing to digitised touch points throughout the whole ecosystem. There will be digitisation of current touch points along with new data assets. 
  • These will include satellite images, remote sensors, telematics, and digital wellness data. 
  • Insurance companies can leverage this data to generate actionable insights for the underwriting process. This will help them offer more personalised pricing and coverage to customers. 
  • Artificial intelligence can enable new product development and coverage for risks that were uninsurable previously. 
  • Going forward, telematics and computer vision will bring about changes in auto insurance claims and processing. Driver risks will be better classified as well. 
  • In health insurance, AI will enable quicker detection of issues and notifications to care teams. This will enable better decision-making and accurate diagnosis along with symptom-checking. 
  • Vehicle maintenance recommendations and rewards for driving behavior may be a possibility in the near future. 
  • AI will help accurately estimate and underwrite risks in all segments of insurance, including property insurance. It will enable quicker fraud detection, identifying those more likely to commit fraud.

Customer communication can also be automated along with quote generation, personalised offerings, and more. So what does the era of AI look like in the future? Here’s finding out.

The Future of AI in Insurance

The future of artificial intelligence in insurance is widespread. These technologies are already transforming the sector greatly. Here are some trends that are worth noting: 

  • Connected devices will increase in future years, with massive data generation for better insurance underwriting and risk assessment. 
  • It will lead to newer categories of products and personalising pricing models, along with real-time service delivery. 
  • Insurance carriers will understand customers better due to artificial intelligence. 
  • The industry will also be transformed by 3D-printed buildings and other commercial manufacturing along with autonomous vehicles, more safety features, and other robotics. 
  • Open-source protocols will enable easier sharing and access as far as data is concerned. 
  • Convolutional neural networks and deep learning will be used to create more active insurance offerings based on individual activities and behavior. 
  • AI will help create risk profiles quickly, making it possible to easily purchase insurance. Carriers can instantly issue policies backed by data-driven algorithms. 
  • Smart contracts will instantly authorise payments from customers with expedited policy purchase and management models in place.

Taking all these aspects into account, it can be said that the future of insurance is an AI-driven one. A new era will ensure better customer experiences across the spectrum along with enabling usage-based and personalsed insurance models in multiple categories. 

FAQs

1.How does artificial intelligence enhance the accuracy and speed of risk assessment in insurance?

Artificial intelligence boosts the speed and accuracy of risk assessments for insurers. It analyses and leverages data to identify all possible risk factors of customers and build risk profiles. This helps insurers take underwriting decisions quickly after evaluating applicant data. 

2.What AI-driven technologies are reshaping customer experiences within the insurance sector?

AI-backed virtual assistants and Chatbots are already revolutionising customer support through more personalised service and interactions. This is proving helpful in terms of policy and claim management, grievance redressal, and renewals. AI is also transforming the policy process with quicker issuing and underwriting decisions. This is helping customers buy policies with minimal hassles. 

3.How does AI facilitate fraud detection and prevention in the insurance domain?

AI is enabling better fraud prevention and detection in the insurance sector. It is helping analyse bigger data sets for detecting anomalies and fraudulent patterns. Models are being trained to flag instances of potential fraud. These systems are preventing and identifying phishing attacks, identity theft, and payment frauds. 

4.What are some examples of successful AI applications in underwriting and claims processing?

Some examples of successful AI applications include automated data analysis of customers for quicker risk assessment and underwriting. The same procedure is being used for claims processing, based on data from connected devices and multiple other channels. AI is helping create risk profiles of customers faster while personalising pricing models and offerings accordingly.

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