Artificial Intelligence (AI) is a term making heads turn around in the insurance business these days. More and more insurance agencies are incorporating the use of artificial intelligence to streamline their work processes. AI has a variety of applications which have a lot of practical use in the insurance sector.
As per a report by Accenture’s Technology Vision for Insurance, more than 75% of the insurance executives are of the view that AI is going to significantly or completely change the insurance industry in the coming years. Another report stated that around 53% of the insurance agencies are already reaping the benefits of AI in one or more of their business processes.
Some Key Artificial Intelligence Stats
- By 2020, chatbots will replace 85% of customer service (Innovation Enterprise)
- 44% of insurers feel AI’s best benefit is its data collection ability which helps in better decision making (Chatbots Magazine)
- 11 working days/year are saved in data collection with the use of Artificial Intelligence in the insurance sector (Statwolf)
- By 2020, 30% of businesses will incorporate the use of AI in one of their sales processes (Venture Harbour)
- By 2025, the AI industry is going to be worth $190 billion (Markets and Markets)
So, let’s get started and figure out how exactly is artificial intelligence changing or likely to change the insurance sector for the better in the coming future.
Top 5 Positive Artificial Intelligence Impacts on the Insurance Industry:
Escalated Behavior-Based Insurance Policies
One of the biggest ways Artificial Intelligence is positively impacting the insurance industry is with the rise of usage-based or behavior-based insurance policies. Earlier, the past activities of the customers laid the foundation for customer offers and premium policies. Now, AI enables collecting the customer data in real-time, enabling policy administration services companies to provide relevant policies or make appropriate changes in the previous policies.
For instance, insurers are able to gain in-depth insights into the driving habits of their customers through their phones using AI. Phones can let the insurers know if the customers are following the safety standards set by the traffic police, how well are they accelerating, braking, and using other driving tools and features. All this data leads to better risk assessment and offering of customer premiums.
Rapid Customer Service
When it comes to providing customer service, AI has created a great impact on not only the insurance sector but in almost every other industry through the use of chatbots. These bots are capable of communicating with multiple customers at the same time, along with providing assistance 24/7. As per a study published by Tata Consultancy Services, the amount that has been invested in the insurance sector for AI comes to a staggering $124 million dollars.
Every insurance company faces the issue of customer queries related to their existing or new policies which demand a lot of manual time and efforts. Chatbots are extremely helpful when it comes to answering the most common queries of customers related to their policies. These bots also let the insurers save considerably on the hiring costs, which creates a win-win situation for the insurers.
Accelerated Claims Settlement
Settlement of claims was never so easy and fast until artificial intelligence came into the picture. AI behaves like a proof collector which assesses the claim’s genuineness and provide settlement solutions based on the same. As per a leading provider of claims administration services, policyholders can use their Smartphones to send immediate pictures of house damages owing to a storm, car accidents, and more. AI eliminates the paperwork need and informs them about their claim status as soon as possible.
In the year of 2017, a US tech startup named Lemonade made news when its claim bot settled the claim in just 3 seconds! In these 3 seconds, the bot reviewed and cross-verified the claim with client’s policy, used around 18 algorithms for anti-fraud, sanctioned it, and instructed the bank to let the policyholder know of claim settlement.
Remarkable Fraud Detection
For the insurance sector, the biggest challenge with which they have to deal with is that of the insurance fraud. If we talk of the figure of the insurance fraud, it is more than $40 billion per year, explains FBI. This takes a bearing at the honest policyholder’s, with them facing an increase in their yearly premiums by $400 to $700.
What AI does is that it analyzes data on a large scale as compared to the manual data assessment by the employees, thus resulting in better fraud detection. One of the methods which AI adopts here is the establishment of similar fraud claim patterns and catch hold of the same at the earliest. A French startup by the name of Shift Technology has been able to detect fraudulent claims with a high accuracy rate of 75%.
Advanced Personalized Coverage Approach
AI collects real-time data of the customers, and this makes it possible for insurers to offer customized policy offers to them as per their behaviors, lifestyle, and spending habits. This is better than offering them a number of plan options which hold little to zero relevance to them.
Apart from this, information received through the conversational history of users with the help of chatbots let the insurers suggest matching products to them. This eventually leads to an ideal digital experience for the customers, which is unique and personalized at the same time.
These are just some of the advantages that come along with the use of artificial intelligence in the work processes of the insurance industry. There may be a lot of debate on whether or not AI will completely change the way an insurance company works in the future. However, through assessment of the above-mentioned data, it can definitely be established that AI has provided solutions to some of the major issues faced by the insurers and the customers. At present, AI is just moving ahead at lightning speed, gaining worldwide recognition and acceptance in the insurance sector.