4 Ways AI is Changing the Insurance Industry

Almost every industry has already seen a lot of benefits of applying artificial intelligence across its processes. The potential of this technology (or rather, a set of different technologies that make it), is huge and yet to be explored fully.

AI technology concept

However, industries that deal with a lot of data, calculation, and rule-based processes are already experiencing a revolution with AI, and insurance is no exception.

Thanks to its diverse underlying principles, such as robotic process automation (RPA) and natural language processing (NLP), AI is transforming both the back end and the customer-oriented aspects of the industry. Here’s how.

Claims Management

Claims management can be an extremely labor-intensive and time-consuming process, for both insurers and customers. From filing a claim to reimbursement, there are countless steps and a lot of information to sort out and analyze.

Luckily, AI digital assistants can automate the entire journey, and both sides benefit from this sort of automation immensely. An AI-powered bot will take all the necessary documents and pictures from the customer, extract relevant data from them, analyze it, enter it into the system, and wrap up the process.

Computer monitors and data analysis

Considering AI can process vast amounts of data within seconds, its implementation in claims management shortens the otherwise extremely extensive process. What’s more, it eliminates the need for live agent interference.

The customer gets their claim settled much faster and more accurately. Humans are prone to errors in calculation, especially if there are many data points to consider and cross-analyze. On the other hand, AI-based bots are immune to such errors, and they perform these tasks automatically.

Of course, the insurance company gets a trustworthy digital assistant that can cater to many customers simultaneously. This is both an efficient and cost-effective way to manage claims since the company doesn’t need to employ many agents.

The human agents’ assistance will still be required from time to time, but not nearly as much as before, so a small number of well-trained personnel are all an insurance company needs.

Fraud Prevention

According to the FBI, the costs of insurance fraud amount to a staggering $40 billion per year. This doesn’t only hurt the industry, but also the average Joes who have to pay for increased premiums.

A cyber security concept

Fraud detection and prevention are extremely important for everyone involved. AI technology plays a major role in modernizing the systems for detecting the kind of fraud that the human eye could easily miss.

How does it do this? AI-based systems usually look for unusual patterns. For example, by comparing a claim to the database of existing ones, it can notice if the claim is too high and thus, most likely fake.

However, AI for fraud prevention doesn’t operate in a closed system only. It can match the data from the company’s system with outside sources, such as social media, news, and similar. This way, AI can detect even broader-scale schemes, such as the infamous “crash for cash.”

Product Customization

As we’ve seen, AI can work with a vast amount of data and produce precise and accurate results. That way, it can provide customers with tailor-made products to suit them to a tee. Likewise, it allows insurers to make accurate risk assessments and more.

Risk spelt in letters

What’s more, when it’s time for customers to renew their policies, an AI-based assistant can reach out to them proactively, reminding them that their policy is about to expire. If they are not satisfied with the current policy, an AI system can take their needs into consideration, cross-reference them with the company’s data on them, and produce a customized solution they will be happy with.

A growing trend in the industry is collecting real-time data through vehicle telematics. This allows companies to make accurate assessments and reward safe drivers with less expensive insurance deals, for example.

Customer Support

Insurance companies get another major benefit from AI, i.e., automatic customer service. In the golden age of smartphones, customers tend to prefer to communicate with businesses through messaging platforms. Calling is just inefficient as vital information can be misheard and people are often required to wait on hold for a long time.

As the popularity of messaging platforms grows, so does the use of live support chats, and most importantly, customer service AI chatbots. They are great at understanding customer intent thanks to their natural language processing abilities and can provide assistance with virtually anything.

Call centre support agents

From answering questions to updating status information and solving billing issues, customers can now resolve their problems without the need to talk to a live agent.

Of course, a chatbot can also be integrated with the live chat option. That way, if a customer requires human assistance, the bot can redirect them to a live agent, providing the agent with a summary of all the information it has collected about the customer in question.

The Future of Insurance With AI

Thanks to various AI-related technologies, such as the previously mentioned RPA or machine learning (ML), insurance companies are predicted to undergo systematic changes. Not only will they be able to further develop their existing services, but they’ll also be able to provide new ones.

Reading the time from a smart watch

For example, we have mentioned the use of vehicle telematics in assessing the risk factor of the policyholder. The Internet of Things (IoT) devices, such as wearables, geoinformation systems, and various sensors, will allow insurance to have access to real-time customer data.

Not only will insurers be able to do more precise analytics in order to shape their packages and tailor their rates, but they will also be able to provide advisory services. For example, they could provide information on the safest driving routes to their policyholders.

So the insurance sector is on its way to becoming completely dependent on emerging AI-based technologies. As these technologies progress and diversify, so will the way insurance companies operate and provide their services.

One thing’s for sure — AI is changing the world of business in general, and whatever happens in the near future, all the paths lead to higher personalization and customization through this revolutionary technology.

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