The insurance industry is going through a dramatic digital transformation. Technological innovations are accelerating business performance, by enabling insurers to offer better, faster and more accurate coverage. Insurance companies are implementing a wide range of digital technologies to meet ever-changing demands in the market and deliver sustainable operational efficiencies.
AI (Artificial intelligence) is one of the biggest technological innovations in the landscape of insurance. Research by Genpact found that the adoption of AI is increasing rapidly among insurers, with 87% of carriers investing more than $5 million in AI-based technologies every year. Insurers are harnessing the power of AI and machine learning (ML) along with other digital technologies, including Big Data and Analytics, Automation, Internet of Things (IoT) and Blockchain, to improve customer experience and reduce costs.
Insurance companies can leverage AI to engage with customers in a faster and easier way through features like AI-powered chatbots and robo-advisors. The application of AI and ML in insurance can also be used to predict customer behavior and needs, optimize sales strategies, intelligently underwrite policies, and predict and identify frauds. By leveraging AI, insurers can design new business models, and launch customized products or solutions in a short span of time.
5 ways AI is transforming the insurance industry:
The application of artificial intelligence in the insurance industry can significantly improve business growth. Here are 5 ways insurance companies are adopting AI to streamline insurance operations and enhance customer experience.
Generally, when customers file an insurance claim, it takes considerable time from the beginning to the end. Many customers have to contact an insurance agent and answer dozens of questions to complete the claim. Speed and success in settling claims is a critical factor for insurance business efficiency.
AI settles claims faster with more accuracy. Companies can use AI in insurance claims management without depending on the parties involved in the process to determine liability. Application of AL and ML (Machine Learning) will enable the insurers to resolve the claims and pay for the damages in a matter of days. Hence, customers can have their claims settled in an expedited manner. AI Jim, a chatbot developed by Lemonade, apparently paid one claim in three seconds.
Detection and prevention of fraudulent claims
It is one of the most obvious reasons for the application of AI in insurance. Coalition Against Insurance Fraud conservatively estimates the total cost of fraud is $80 billion a year across all lines of insurance. Fraud costs 5-10% of claims costs for U.S. and Canadian insurance companies.
AI solutions help insurers defeat fraud and automate claims. AI reduces the task of manually reviewing thousands of insurance claims and allows manpower to focus on complex problems. AI has the ability to analyze the mass amount of data from a wide range of sources such as customer information, previous claims, social media and other channel data to predict and prevent fraudulent claims. Shift Technology’s AI-based solutions have analyzed 600M+ claims with a 75% hit rate, helping insurance companies prevent fraud.
Customer services and customer experience play a key role in the success and failure of any business. Customers prefer an easy system and personalized options and want to buy from insurers that offer them the benefit of expedited settlement, reduced claims cost, and AI-based risk mitigation. Hence, insurance companies need to make policy acquisition easier and keep policyholders engaged.
AI can enhance the insurance buying experience in several ways. Customer platforms and mobile apps can be used for self-service and personalized experience. Features like face identification and voiceprint reduce the time taken for customer verification. Chatbots and virtual assistants provide quick resolutions to standard customer queries in real-time. Customers can enjoy a fully online or app-based shopping experience.
Companies offer insurance products based on a variety of factors, as two accidents or incidents are never the same. Insurance agents are required to have extensive knowledge about products and understand the needs of their new and prospective clients.
AI allows insurance companies to customize their solutions. AI-enabled platforms can analyze millions of data patterns to identify the most appropriate customized product for a particular customer. These tools can also alert insurance companies on risky customers, without the need for personal questioning.
For example, insurers can collect real-time driving data from a vehicle to analyze it with machine learning algorithms to make the personalized risk profile of a driver. Individuals who have safe driving habits are less risky and insurance companies could offer them a better rate. Adoption of AI not only helps save company costs but also improves customer experience.
Business intelligence and big data
The internet of things (IoT) provides insurers with loads of data. Since more insurance consumers are using online platforms to check products and prices, make purchases, and connect with insurers, the volume of data is increasing every day. Insurance companies need to monetize this asset by adopting new technologies. Insurers can generate insights from both data sources – external and sensor-based.
Insurance providers can use AI for predictive analytics based on data collected using IoT devices. AI uses the power of machine learning to identify the highest value clients and high-potential leads, enabling agents to invest resources more efficiently, improve customer retention and identify additional sales opportunities. It will help insurers to successfully maximize up-sell and cross-sell, as well as reduce customer churn.
AI, data analytics, IoT, machine learning, etc. are leading to disruptive changes in the insurance industry. Insurers are leveraging these technologies to create innovative products, streamline insurance operations and enhance the customer experience. They have started to capitalize on the potential of the technology to meet the evolving customer needs.
Carriers have begun to realize the benefits of AI in insurance. Artificial intelligence can save significant costs and speed up the insurance transaction process. It is very helpful in services like policy document check or verification, analysis of submissions, development of innovative insurance solutions and detection of fraudulent claims.
Widespread adoption of AI across the insurance industry has been seen over a couple of years. The industry is now more innovative and tech-savvy than ever before and is transforming with AI.
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