Artificial intelligence (AI) is revolutionizing the insurance industry, bringing increased benefits to both insurers and customers. Insurers are operating more efficiently by automating processes with AI to achieve faster results at considerably lower costs. With an exponential increase in the availability of behavioral and telematics data, insurers are leveraging this technology to develop more personalized products for customers.
How AI is Being Utilized
1. Streamlining Claims Processing
Claims processing in insurance is a rigorous task requiring a lot of time and effort that can be prone to error when done manually. AI can streamline the entire process, from data capture, settlement creation, review and adjustment, to approval and authorization, as well as payment and recovery. AI can also process legal issues and manage communication more efficiently. This not only makes claims processing faster and easier, but also prevents potential errors and frauds. With AI, insurers not only get a cost-effective and highly efficient mechanism for settling claims, but customers also benefit from a much faster and satisfying experience.
2. Fraud Detection
Inevitably, the insurance industry is susceptible to fraud. From false information to false claims, fraudsters impose billions of dollars of loss to the industry each year. AI and machine learning (ML) algorithms can be used to analyze huge datasets and identify patterns to detect fraudulent claims in advance. Data points aggregated from social media sites can also help identify fraud. Scammers are constantly innovating and discovering new techniques to cheat the system, and these AI algorithms can be designed to evolve with the new data.
3. Personalized Insurance Products & Services
With the explosion of data from IoT devices, AI in the insurance industry is making groundbreaking progress in bringing customized policies to customers. From telematics devices in vehicles to wearable devices like fitness trackers, smartwatches, home assistants and even smartphones, there's a huge amount of data being generated that ML algorithms can use to better understand customers and design new products, personalize pricing and deliver service in real-time. As ML algorithms evolve with time, the accuracy in customer profiling, personalization and better customer experience is inevitable.
4. Customer Service Chatbots
The insurance industry is an information-heavy environment and it's common for customers to have lots of questions regarding policies and processes. AI-powered chatbots can help immensely by providing 24x7 service and faster response times. Chatbots can also be effective in processing claims, cutting down the workload that insurers are burdened with daily. If desired, chatbots can intelligently route calls to specific agents or executives for resolution, and can also help with lead generation, conversions and acquiring customer insights.
The Future of AI in Insurance
Artificial intelligence is already changing the insurance industry, but as AI-related technologies such as ML, natural language processing (NLP) and robotic process automation (RPA) further develop, a seismic shift in the industry has been projected. Massive data sourced from various IoT devices, telematics and social media and their usage in AI technology will allow insurers to better understand what customers need so they can tailor products accordingly, as well as bring down costs and speed up processes.
Insurance will shift from its current state of 'Detect and repair' to 'predict and prevent,' transforming every aspect of the industry in the process." - McKinsey Report
In the future, AI could allow insurers to provide advisory services, such as suggesting a safer driving route and linking the insurance premium on the selection of the route by the policyholder. Similarly, insurers could also provide personalized health and fitness advice to customers based on their medical data analyzed by AI. The future of AI in insurance will open new business opportunities and revenue streams for insurers.