Unlocking the Business Value of AI in the Insurance Industry
Artificial Intelligence (AI) continues to disrupt industries on fundamental levels right from business models to value chains. Recently, AI has stepped into the insurance sector, adding major competitive difference by improving efficiency in operations, consumer assistance, and fraud detection.
To rise from enigmatic AI to extreme finesse, specialists require bridging the gap in understanding the technology’s internal complications and its business value proposition. Identifying achievable and effective applications of Artificial Intelligence is hence the most crucial task faced by insurance leaders today.
Here are 3 key areas where AI is transforming the Insurance Industry
1. Automation and process enhancements
The Insurance industry processes thousands of claims and responds to numerous customer concerns. Almost 60% of claims processing can be done without any human intervention, allowing agents to commit more time on challenging claims. Few insurance companies are already automating parts of their claims process. They are implementing fraud detection algorithms using computer vision and NLP techniques, thus providing an increased quality of service.
An Insurance carrier, based in New York, recently set the world record for AI claims processing with the lowest time of 3 seconds. Furthermore, in the financial year 2018-2019, they have handled 35% of their claims instantly using their precise fraud detection engine.
2. Accurate & Superior Rating/Underwriting systems
Rating serves as the foundation of insurance companies, yet many insurers rely on conventional methods. Individual customers are often assessed using primitive indicators such as loss history, credit score, and BMI. Here AI can offer many tools and technologies not only to speed up processes but also help agents in classifying risk and to bring about accurate predictive pricing models that eventually diminish loss.
An example of this is vehicle telematics, where vehicles relate to wireless telecommunication technologies for a seamless collection of driving statistics and data.
Another example would be in the healthcare insurance industry. This area of insurance continues to gain a lot from data-driven approaches as the healthcare analytics market is on the rise. A Life Insurance Carrier provides price suggestions for different customers based on their individual risk factors. These risk factors include the individual’s age, location, driving history, social presence profile, or even blood pressure. Then, by aggregating all these risk factors using fuzzy logic a Suspicion Index for each individual is created.
Data collection and proper factor mapping is equally as important as the selection of AI algorithm to fetch accurate results for any given rating/Underwriting system. Data collection has seen exponential growth in recent years ranging from simple risk factors to complex projects such as Tensor flight. The Tensor flight provides satellite and street image processing tools to improve the underwriting process and eliminate misclassification errors.
3. Personalization in marketing
Customers expect to receive personalized services that match their requirements, inclinations, and routines. Creating personalized insurance experiences with the help of AI is now an option that companies are using to improve their marketing ROI. They draw insights from data about individual preferences, behaviors, lifestyle details, and hobbies to create personalized products such as policies, loyalty programs, and recommendations. All these are possible using the aid of AI algorithms applied to data sets. These AI algorithms thus develop suggestions that fit customers into feature-specific cluster selection and matching mechanisms.
Insurance carriers can now offer personalized services to customers, machine-generated insurance advice, or even employ chatbots to help customers make the right policy choice. They can also use the collected information on customers to provide tailor-made policies that suit their requirements. This is also profitable for the company, thus striking a good balance between company and customer, improving customer loyalty.
In conclusion, AI will transform how customers interact with Insurance Carriers. Instant personalized help will become a customer expectation norm. Insurers will deliver improved customer experiences and services. As a result, insurers will gain more granular customer insights to help the company come up with better pricing options
To get there, insurers will require partnering with resources having the right skill set, technology know-how, and experience to integrate core business functions with third-party platforms.
Ameex can help your company realize all these AI’s benefits. To know more, write to us.