The Place of AI in the Insurance Industry

If first impressions were anything to go by, the name ‘artificial’ intelligence may not do justice to what the technology can truly offer today’s consumer. The truth is, artificial intelligence is amongst the most popular technologies of the 21^st century, rapidly making way for advancements across various industries. Service providers like insurance companies are making a dramatic shift towards this newfound, widely accessible technology, optimising their business operations and increasing customer satisfaction.

A recent study (Capgemini World Insurance Report 2018) suggests that 75% of executives are certain AI will bring positive changes to the insurance industry. “Today, AI is a roadmap. It is the very practical use of technology for the simplification and automation of processes, leveraging some defined rules around the overall business” says George Hansen, the Claims Actuary of General Insurance, Zurich North America. But how exactly is AI revolutionising insurance practices? The examples are many and the possibilities are endless! 

Faster Claim Processes

Awaiting response on an insurance claim can be vexing. Outdated systems cause delays, create a lack of transparency in the process and lead to additional frustration for customers. However, AI can reduce this time significantly – in some cases to a couple of hours instead of days. Insurance specific AI systems do not require human intervention. They are capable of authenticating identities, filing a claim, interpreting damage, reviewing the system and corresponding with the customer.

More than $40 billion (AED 147 billion) is spent on fraudulent claims every year, in the US alone. AI systems are designed to analyse data and spot fake claims. George Argesanu, head analyst at AIG insurance proudly states “Claims processes are becoming a lot more efficient, fraud will likely be caught more often, and most importantly, more and more losses will continue to be prevented.”

Personalised Chatbots

Having used WhatsApp and Facebook messenger, most of us are already familiar with chatbots. AI powered chatbots are programmed to analyse emotions and comprehend customer needs. This sentiment-analysis of conversations also cues the system to identify when it’s time to hand over the conversation to a human. Today’s chatbots can provide personalised services by responding to basic questions, selling products, calculating rates, accepting payments and filing claims. They’re more like virtual assistants.

Insurance companies are integrating these AI operated chatbots into various platforms from websites to smartphone and messenger apps. A great example is the New York based Lemonade insurance, which grew to a staggering 70,000 plus customers in just one year of its launch. Lemonade does not employ a single human insurance broker. The business is conducted entirely online via their friendly Chatbot, Maya.

Customer-Centric Data Collection

AI is widely being used to gather consumer insights to enhance a customer’s experience and automate procedures. Services powered by AI are not just cost effective, but also offer process efficiency, data accuracy and increased speed of operation.

Telematics and wireless communication is also anticipated to become a growing tool for the insurance sector. With AI support, telematics can go a step further by analysing GPS patterns within data to infer road and traffic conditions, predict potential dangers and help avoid accidents leading to lesser claims and happier customers.

Automation of claim verification of cars involved in an accident by sharing pictures or live video of the vehicle also exists in the market. A partner of Continental Financial Services Group has taken this a step further and established a roadside recovery and assistance service in case of an accident. AI is used to remotely locate the nearest recovery vehicle and automatically arrange for timely assistance.

Customised Marketing & Underwriting

Age old blanket methods of cold calling customers are not effective anymore. Today’s consumer demands personalisation. AI is a remarkable tool to gather customer data allowing for customised insurance products, financial plans, and attractive offers.

Anselm Mendes, the Head of Business Development and IT at Continental Financial Services Group says, “For us, the objective is to empower our advisors with these tools so their conversations with clients are more efficient and can be a lot more comprehensive. The analysis and information provided by AI tools allow advisors to better understand the client’s situation and needs”.

Additionally, with this data Artificial intelligence is capable of automating the entire process of underwriting that typically requires a lot of surveying. AI-powered bots can be programmed to review social media profiles to analyse preferences and patterns as well as predict risks for customers and provide them with the right kind of plans.

Hyper-Intelligent Wealth Management

AI also has the potential to facilitate customers in areas of wealth management. Such technologies will play an important role in managing portfolio strategies that are otherwise difficult for individuals to handle. Their ability to analyse large amounts of data and trends will help consumers and advisors make educated decisions, significantly reducing risk.

Continental’s Mendes adds, “Of course, clients with complex situations and lucrative portfolios will still be personally serviced by relationship advisors, but AI is revolutionary for a large customer base that has a standardised requirement”.

What does the future hold?

Thanks to evolving AI technology combined with futuristic systems (like blockchain technology), we can anticipate a revolutionary change in how we consume and purchase insurance. For example, an individual who drives to and from work daily for an hour and does not drive otherwise can opt for a policy that covers him for the one hour he spends on the road! Another possibility is insurance claims could become automated for a delayed or cancelled flight. No calls, no manual completion of forms and no more long waiting periods.

But how costly will it be to make the transition towards AI technologies? Mendes turns the question around asking “How costly is it not to make the transition? Not utilising technology and not making the transition is a very expensive proposition. It’s true that a decent amount of investment is required to be made but not doing so means running out of business at some point in time”.

The insurance industry is taking the bold step towards becoming ‘AI Positive’. As technology continues to evolve and more innovation is brought to market, we are looking at a possible future where insurance will be built into a lot of things that customers do and interact with every day, becoming a proactive and seamless experience for many around the world.