How AI is Changing the Insurance Industry
Until recently, the insurance industry hasn’t changed much. A digital revolution is happening and a large part of that is due to Artificial Intelligence (AI) technology. AI is making an appearance in nearly every industry and that includes the insurance industry.
In its simplest form, AI is a machine’s ability to perform intellectual functions we associate with human minds such as perceiving, reasoning, interacting with an environment, problem solving, and even exercising creativity. You’ve most likely interacted with AI technology before. Voice assistants like Siri and Alexa are founded on AI technology, as is the face recognition on smart phones.
Here's how the insurance industry is embracing AI today and how it might be used in the future.
You might see the use of virtual assistants, called chatbots, pop up to help you navigate carrier websites. These chatbots can interact with customers at any time to answer common questions or provide basic information. They can also possess advanced features such as initiating claims. Chatbots are getting smarter through machine learning, a subset of AI, that allows the computer to gain insights, recognize patterns and make better decisions without the aid of a human.
Underwriting and Pricing
One of the biggest differences between insurance companies is not their products but their prices. Insurance companies can provide individualized service and offer appropriate premiums with an accurate risk assessment. AI can be used in underwriting to look at textual data from several sources and automating the customer data like location, marital status and other demographics. Customers may benefit by paying for custom fit coverage.
The secret to fraud detection is finding patterns that humans might miss – that’s where AI can help. AI can detect oddities and fraudulent insurance claims. It’s also used to pinpoint inaccurate information entered by customers much faster and more efficiently than a human could which aids policy issuance, claims adjudication and the overall customer experience.
A primary function of insurers is to process and pay claims for customers. The carrier's claim representative must review multiple policy provisions during the claims process. This involves combing through every detail to be sure the customer receives the proper value for their claim. That can be a painstaking process, but AI can help. AI capabilities can improve efficiency and insights by rapidly determining the key facts in a claim, the related policy provisions and estimate the potential costs in a claim and forecast the potential costs involved. AI does this by analyzing images, sensors and the insurer’s historical data. An insurer can then look over the AI’s results to verify and settle the claim, benefiting both the insurer and the customer.
The Future of AI and Insurance
It’s possible AI will replace some roles in the insurance process. It is more likely that AI will be used to enhance the efficiency of certain jobs creating efficiencies, reducing errors, and providing for a better experience.
As AI makes its way into every corner of our lives, it is also finding its way into our insurance interactions. As the insurance industry adopts AI into underwriting, claims, customer service and more, the goal is to create efficiencies, increase competition, and improve the policyholder experience.