Artificial Intelligence, or AI, is said to be changing the world, as we know it. From processing huge chunks of data to enhancing memory capacity and cloud computing, AI is everywhere now. AI is being shown to provide a near-human experience to industries worldwide. And insurance is not outside that loop.
I’m not a technologist, but it’s hard to ignore all the hype around AI so I try to gather as much information as I need to stay updated. In a research paper by Deloitte, I got to learn that there has been a 4.6x increase in AI-related deals in the period from 2012-16 and $47 billion was predicted to be spent on these deals by the end of this year. While, the pandemic has slowed all growth, true, AI is still being considered as an important innovation to pay heed to.
What has insurance to do with AI? Well, let’s find out more about the impact of AI on insurance and related fields.
Why does the insurance industry need AI?
AI technologies are already being implemented in other industries like automobiles, real estate, eCommerce, and the like. From smart chatbots to unstructured data utilization, artificial intelligence has indeed made many tasks easier and more seamless for all of us as consumers. Let’s look at one application -the much-in-the-news autonomous cars. According to NAIC, automated vehicles produced about 30 terabytes of data in short spans of time through its maps and sensors. It can be daunting for any individual to handle such huge chunks of data, while AI is capable of computing, analyzing, storing, and utilizing such data to generate necessary output.
Hard-charging competitors, lagging traditional systems, global connectivity, innovation in technologies, and emerging customer expectations are driving the use-case for AI in insurance. Increased datafication and the resource-dependent processes of today seem to call for a faster, automated, and interactive system to ensure a high level of satisfaction among customers. The Deloitte survey also states that investments in artificial intelligence technology have increased by a whopping 69% from 2011 to 2014. It would seem that the folks with the big bucks have already made the choice in favor of AI.
Collecting and computing data is taking a whole new look these days. Real-time insights are all the rage. Industries are in a race against each other to prove how much data they can process regularly, thus generating mountains of data per minute with advanced technologies. Now, someone should be able to process all of this data into relevant knowledge, information, and action, right? And who can do it better than AI?
What are the common AI benefits in insurance?
Handling the data explosion from a plethora of connected devices is one of the primary benefits of AI applications in insurance. There are also well-documented use-cases of leveraging AI to create more targeted products and offers to drive conversion. Mountains of data are being mined by AI to generate better assessments of risks and customer profiles. That apart though, there are a few more interesting observations in this field that you could take note of.
The advances in physical robotics
This field has seen some great achievements in recent years with 3-D printing models, self-driving cars, and surgical robots. Soon, AI-driven 3-D printed buildings will play a major role in assessing risks and developmental threats in insurance. Autonomous drones, vehicles, equipment, and robots will also change the insurance perspective of cars, properties, equipment, and so on. Carriers need to prepare themselves for an AI wave and start analyzing their effect on the industry.
Improvement in cognitive technologies
As for now, cognitive technology is mainly utilized to process unstructured data in the form of images, voice, and text. However, the time isn’t far when complicated data streams generated by active insurance products related to a person’s actions and general behavior will be processed seamlessly using AI. Think about health insurance products tied to the exercise a person does, as recorded and analyzed by a smartwatch. Carriers will make the most of AI models that will be constantly learning new things and adapting to their environment to create new categories of insurance products and also detect anomalies in behavior and underlying risks in advance.
Faster claim settlements and reduced fraud
One of the many benefits of AI in insurance could be that it will directly benefit customers with the faster processing of claim settlements. The efficiency of an insurance product often depends on the speed and accuracy of settling claims, which takes customer satisfaction to the next level. AI technologies will also be able to distinguish between genuine claims and fraudulent ones, thus increasing the customers’ trust. According to a report by Emerj, about $80 billion is reported to be stolen through fraudulent claims that are filed without the knowledge of the insurance holder by stealing his/her identity. With AI keeping watch, insurers will be able to see through such claims and take necessary actions readily.
Automated identity verification is also being taken up by some insurance providers as a necessity under current circumstances, and machine learning is being incorporated extensively in the industry to customize the sales experience. With time, we will also observe major innovations in this field, like automated facial recognition, lifespan readings, and health risk generators to customize our coverages accordingly.
There are some exciting options out there. As far as those relate to provide a better experience to the customer, they should find favor. That said, I see this as a tool to help customer-focused insurance agencies and companies build a better relationship. It’s not yet time for the Insurance Terminator.