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The pandemic has impacted every industry in one way or the other. The insurance industry is no different. However, the silver lining is that it has reinforced the importance of technology more firmly, especially Artificial Intelligence (AI) and Cloud Computing for this specific sector.
Artificial Intelligence in the insurance market size is valued at USD 6.92 billion by 2028 and is expected to grow at a compound annual growth rate of 24.08% in the forecast till 2028.
Based on a survey, 21% of insurance organizations report they are preparing their workforce for collaborative, interactive, and explainable AI-based systems. It is predicted that investment in AI Insurance is ranked high on decision-makers agenda.
The growing need to offer personalized insurance services leads to the requirement of insurance automation for operational processes. AI does exactly the same by automating the operational tasks performed by humans and are done without fatigue and error in a shorter span of time.
AI has brought in a revolutionary change in the way the insurance industry performed a few years ago. Insurance was normally associated with loads of paperwork, time-consuming meetings, filing complicated claims, and waiting for months for a decision.
AI in insurance has brought in automation that has started rebuilding the trust toward insurance providers. Not only this, insurance automation helps in stimulating business growth, lowering risks and frauds, and automating various business processes to reduce overall costs.
To cut it short, it is helping insurers and policyholders alike. Here’s how:
The machine learning algorithms help underwriters to gauge risk with more information that helps them to offer better and tailored premium pricing. Additionally, AI in the insurance industry is streamlining the process to connect applicants with carriers directly making the process more efficient.
With the need of the hour and to stay competitive, it has become imperative for the insurance industry to adopt the latest technologies like machine learning, robotic process automation, and more. Let us understand how can the adoption of the latest technologies add value to the existing tedious and exhaustive insurance process.
Processing claims is a complicated process. Agents are required to assess various policies and comprehend them with every detail to determine how much the customer will receive for the claim. There are many steps that are repetitive and standard tasks to be performed. Machine learning in insurance can take up such automated tasks to reduce errors and the time taken to process the claim.
To increase operational efficiency, companies have been adopting emerging technologies like AI, RPA, and the Internet of Things (IoT). The increase in connectivity, smart home assistants, fitness trackers, telematics, healthcare wearable devices, and other types of IoT devices, now allow insurers to stay connected and collect comprehensive data automatically. This data can then be imbibed into the underwriting process and claim management tasks that will help in better decision-making with reduced risks.
The process of underwriting was largely dependent on the data provided by the applicant manually by filling up regular forms. There is always a possibility of the applicant being dishonest or making mistakes that may lead to inaccurate risk assessment.
The rise in connectivity and increased use of IoT devices, help you fetch the larger datasets with correct information. Natural Language Processing (NLP) enables insurers to assess through the abstract resource to fetch apropos information to better assess the risk.
Research analysis shows that the benefits of the AI in insurance, specifically in underwriting, include the ability to:
The massive insurance industry collects approximately $ 1 trillion in premiums every year. With the size, the fraud ratio too is high. The total cost of non-health insurance fraud is estimated to be more than $40 billion per year that in turn increases the premium cost from $400 to $700 per year per family. Read below to understand how artificial intelligence in insurance claim fraud can be prevented.
Adding value to the existing process only makes sense if it brings along the visible benefits. AI in insurance brings a sigh of relief by revolutionizing it in many ways:
AI in insurance claims can handle the first notice of loss without or with minimal intervention from humans where insurers can report, route, triage, and assign claims. Chatbots can efficiently facilitate the claim reporting process as the customers can report their incidents from any device, any place, and at any time. The AI-enabled chatbots can further disperse the information for further processing.
By regulating all the processes of data capturing, claims creation, authorizations, approvals, payment tracking, and recovery tracking through AI, can be paired with other applications to streamline the fraud detection process, thus saving time and costs.
Artificial intelligence in insurance claims can reduce claims regulation costs by 20-30%, processing costs by 50-65%, and processing time by 50-90% while improving the customer service experience.
The power of Artificial Intelligence in the insurance industry has brought in a revolutionary change in the level of customer service. As mentioned above as well, chatbots are the easiest way to initiate the process and further disseminate the information to the next aligned process without human intervention making the process smooth, quick, and error-free.
AI-powered chatbots can cross-sell and upsell products based on the customer’s profile and history. By automating the repetitive process, scaling up the operations can be done easily while utilizing the human resources in more strategic roles.
With the advent of disruptive AI technology, Machine Learning, Deep Learning, and OCR, assessing the damage has become easier and quicker as the same can be easily done by uploading a picture of the damaged object.
Predicting the potential loss and providing recommendations make the loss estimation process quick and efficient.
With the power of AI, the fraud detection system addresses the shortcomings of hand-filled applications and provides valuable details on tips for better human judgments. Machine learning and deep learning algorithms are well equipped to identify repeated patterns that might be abnormal or fishy.
From the above-mentioned benefits and value adds, an inference can be drawn that there are fundamentally three areas in which artificial intelligence technology in insurance can bring the revolution – claims process, risk assessment, and forecasting. It becomes easier to understand it with examples. Mentioned below are some of them:
Lemonade is an InsureTech startup that uses AI technology to run end-to-end insurance tasks. This has helped them in saving the operational costs that leverage them to offer reduced prices, increase customer acquisition, and elevate customer experience and engagement.
With AI, it lets the lenders assess the traditional and non-traditional data leveraging them to better gauge the risk. A better and automated underwriting process helps the company to boost profitability while reducing the risk.
Nauto is a driverless car company. Its aim is to avoid collision of the commercial fleets by reducing distracted driving. The AI-driven driver safety system uses the dual-facing camera, CV, and other algorithms to prevent risky behaviors in real-time
Implementing chatbots, NLP, and OCR are just the first step toward automation of the insurance industry. The pandemic has virtually forced us to adopt new technologies to stay in the business. This technological wave is certainly going to continue. Deep learning techniques and artificial intelligence are yet to be exploited to their potential. The scenarios will surely advance to machines mimicking the perception, reasoning, learning, and problem solving of the human mind,
It is expected that in the next decade, insurance will shift from its current state of “detect and repair” to “predict and prevent”. The users too are getting accustomed to using the advanced technologies to enhance productivity, lower costs, enhanced decision making, and enhance customer satisfaction.
The future of the insurance industry will take a steep curve to achieve new heights with the implementation of various AI technologies. It will not only impact the insurance companies but will also impact the people with insurance. Let’s explore some of the trends:
We are experiencing this even today. With IoT, the number of various devices that are connected is increasing day by day. With AI, this connectivity will lead to the collection of comprehensive data. Understanding consumer behavior with this data will enable the insurance industries to come up with new product categories, more personalized pricing, and increasingly real-time service delivery.
Extended reality is the advanced form of virtual reality. It will not be necessary for the object to be insured to be physically present at the spot. Inspection will be done virtually with the help of AI technology after the claim is filed. It will be easier to provide better quotes based on the safety feature of the vehicle to be insured.
Data is the king in AI. Collecting the data from various sources and making sense of it is what AI technology is. However, ensuring that the data is precise and accurate will help in making better business decisions. Insurance companies can use accurate data to mitigate risks and frauds even before they take place.
Artificial intelligence in insurance is all set to transform the future of the insurance industry. Appinventiv can be your reliable development partner that helps you harness the benefits of automation in the insurance sector.
With our expertise in AI software development services. We have successfully helped businesses in transforming their business capabilities.
For instance, Appinventiv has successfully automated the banking process for a leading bank in Europe. The automation process helped the bank in improving the accuracy by 50% and the ATM service levels by 92% .
Also, with the help of conversational AI in banking, the client is able to handle over 50% of customer service requests through chatbot, thus reducing the manpower costs by 20%
You can also exploit the expertise of the seasoned team at Appinventiv to take a leap into the future of insurance.
AI is today and the future of insurance. Leveraging various tools of AI technology will automate the insurance processing from application state the claim settlement in no time that too with no human interventions. Saving this cost and time will help the insurance industry to come up with better product categories and personalized premium quotes that will be generated on data collected from various sources.
AI insurance is at a very nascent stage right now. It will change dramatically in the next decade.
Q. What are the advantages of applying AI for Insurers and policyholders?
A. The benefits of applying AI for insurers are listed below-
The benefits of applying AI for policyholders are listed below-
Q. Which function of the insurance industry is expected to exploit AI in the future?
A. Although the impact of AI is holistic aiming to automate the process/functions to increase efficiency and save costs and time. However, with the use of predictive analytics, the underwriting process is the one that will adopt it to the maximum.
Q. What are the emerging AI use cases for auto insurance?
A. Primarily following are the emerging AI use cases for auto insurance