Products using Artificial intelligence or AI are becoming a part of our daily lives, though we may not have realized it. The stories we see on our social timelines, and results we see in search increasingly rely on AI to personalize and improve the experience. Devices like Alexa and Google Home have entered our living rooms, and use AI to converse with us and do our bidding.
Like every other sector, the insurance industry too is warming up to the use of Artificial Intelligence to deliver better service and create competitive advantage. In fact, AI is poised to bring a major impact in the insurance industry if it is used to its fullest potential in terms of increasing productivity, lowering of costs and improving the overall customer experience.
Artificial Intelligence will impact the insurance industry in several ways:
- Data from connected devices: Connected sensors in homes, cars and even on the body, will generate a lot of data. This will help insurers estimate probability of risk with a much greater accuracy.
- Robotics in daily life: With robotics, precision would rise, and accidents reduce. For example, autonomous cars have inbuilt devices to check traffic situations and then drive accordingly, irrespective of the driver’s mental and physical condition. This automatically reduces his chances of meeting with an accident.
- Cognitive technologies will evolve: and thus, be able to change the choices or products or technologies based on human behavior in the real time.
Here are a few application using AI that insurers have already started to bring to the market.
Helping customers choose a policy
Chatbots have been developed by insurance companies to help customers with their queries. AI powered chatbots using natural language processing technology and intelligent assessment of the customer’s profile are capable of recommending users with the right policies. As a result, the insurer can save on marketing and distribution costs on its policies.
Insurance companies are developing algorithms using learning gained from data, to accurately assess risk profile of a customer and price the risk. Manual intervention would only be needed in one-off cases, which algorithms cannot predict. The risk assessment process, therefore, would not only speed up, but it would also be more accurate. Policies can be issued more quickly and also at lower administrative costs.
For example, Telematics in auto insurance, tracks the usage of the vehicle in real time and provides valuable data to the company in terms of how safely the vehicle is being driven. This can help the company understand the possibility of claim and accordingly fix premium for the customer.
Quicker and more accurate claim settlements
Settling the claim quickly is one of the best ways of winning the trust of customers and if the company can do this it can increase its customer base. AI would surely be used for the claim settlement process very soon, especially for claims like motor claim, etc. where the claim ratio is the highest in the industry.
The software would capture the claim data such as photos, assess its authenticity, cross-check the documents and quickly provide settlement decision. The whole process would be quicker and simpler than the currently manual process involving a loss adjuster/surveyor. Moreover, the chances of fraudulent claims would also reduce as the software with deep learning over time can become much better than a human in detecting fraud. Lower fraud will reduce costs for all – customers and insurers.
Thus, with technology being the driving force of many industries, it is not very far when insurance would also use AI based technology to fuel its growth. Many insurance companies have already taken notice of the benefits of AI and its applications and the day is not far when others would join in on the AI revolution. In fact, as per a survey done by Accenture in 2017, 79% insurance executives were of the opinion that AI would transform the insurance industry within the next three years itself.
Its an exciting time to be in the insurance industry!
(The author is the Co-Founder of Turtlemint – an online insurance aggregator with a financial advisory platform that is designed to advise clients primarily in the Insurance sector. The company’s platform provides insurance recommendations to customers based on proprietary algorithms and data analytics and also offers a network of offline facilitators to help complete the insurance purchase and provide claims assistance, enabling clients to choose the correct insurance scheme.)