AI has made insurance faster, better, and smarter. How?
Old as the hills, the insurance industry has long resisted the changes imposed by artificial intelligence. Its long-established business models and the legacy environment have not seen updated for decades.
Compared with peers in other industries who made successful inroads towards digital transformation, quite often, insurance services did not cater to modern customer tastes. Until now. To prevent the situation from becoming graver, insurers rushed to embrace AI technology, bringing a tremendous disruption to the insurance space.
Looking ahead, researchers from Juniper anticipate that total premiums generated by AI insurance will reach $20.6 billion in 2024, from just lower than $1.3 billion in 2019. Furthermore, AI in insurance continuing development will enhance, or even automate, the majority of processes. Our AI Development Company help you get this way.
Let’s acknowledge that the time when artificial intelligence can perform any task that a human can is still a long way off. Nevertheless, wouldn’t it be great if AI does at least all the legwork: gather and import data, highlighting its trends? Any top AI insurance company can prove - there is more to it than that. Today, artificial intelligence in the insurance field will change customer engagement, policy risk coverage, premiums payments flows, and claims submission.
In this outlook, we will spotlight the benefits for the insurance industry heading in the direction of artificial intelligence.
AI-enabled IoT culls rich, real-time information about the physical world, contributing to the granularity of insights into customer behaviors. AI insurance gains access to customer data through wearables, location-based sensors, sensors on objects, and geoinformation systems. With the help of machine learning techniques, an AI insurance company can do more precise analytics in real-time.
Traditionally, insurers use generalized models when working with customers to shape their packages and prepare pricing rates due to the lack of data and its complex analysis. Nowadays, it has become possible to overcome this inconvenience. An AI insurance company can collect individual data in real time. Each individual case will provide the basis for the contract contributing to its flexibility and rates accuracy. Thus, artificial intelligence can create a more favorable environment for the customers. But to adjust to the emerging reality, insurance companies need to regroup as soon as possible, and become insurtech companies.
Similarly, insurance products designed and priced on individual needs and lifestyle will enable customers to pay for the coverage they need. A person is no longer just a data in a statistic; they virtually pay for actions, forming their own statistics. Such insurance makeover is very likely to increase the appeal of insurance to a broader range of customers, considerably raising the level of their responsibility.
Recently, an AI insurance company offered a service for people to buy life insurance based on ...a selfie. Smoking cigarettes influences life expectancy. Innovative facial recognition technology rapidly analyses if a person smokes and estimates risk scores without time-consuming medical tests.
Using a combination of images and video, multiple points of data for each user get captured. The software can detect crow’s feet around eyes, estimate body mass index, and how quickly a person is biologically aging.
What is more, a selfie taken in a restaurant may be sufficient for the insurer to check if the establishment has smoke detectors or sells hard alcohol or if the floor looks slippery. With this information in hand, for instance, empower underwriters to more rigorously assess the risk of trauma in a dancing area of the place.
Of course, such findings and their study may be biased. But instead of asking hundreds of questions that take long hours to complete and verify after that, it is still beneficial for carriers and customers alike.
The critical point here is to provide artificial intelligence with the correct input, ensure adequate training for the system with similar cases. Thus, AI insurance will enhance its relevance and accuracy.
Customer journey without delays
No long wait times at call centers for the customers - new AI technologies are revolutionizing the customer experience world. Underwriting is becoming seamless. The customer will need to go through only a few data points to obtain a quote in typical cases.
The claims process is getting sleek as well. Low-level manual tasks can be at least partly replaced with a chatbot to register the case, check the details, and make sure it is not a fraud and pass the claims to the bank for further processing.
"As much as 68% of respondents in the insurance industry claim to use chatbots in a certain segment of their business".
Besides, chatbots can pull on customers' geographic and social data to personalize the interaction. Insurers will also allow customers to adjust coverage for particular things and events and use on-demand insurance.
Through computer vision, a chatbot can examine the evidence and assess the amount of damage. From now on, no lengthy process of sending an insurance inspector to take photos and make a report.
Doing their work with an AI-based platform frees up significant time and resources for insurers. They have an opportunity to deploy towards more valuable activities and review only to complicated claims. The system covers all the rest. It can understand and answer customer requests via email, chat, and phone. As a result, time-to-settle a claim, which is primarily the metric customers care about most, decreases and brings satisfaction.
FBI report that the total cost of insurance fraud in the US is estimated at over $40 billion per year, which can cost an average family between $400–700 per year in extra premiums.
Sometimes, insurance agents keep the money for personal use instead of sending them to the underwriter; or selling insurance without a license to collect premiums.
AI in insurance will let us recognize such fraudulent schemes and combat fraud. With more claims, there is more data, which means that the artificial intelligence system will get smarter and smarter.
However, sensor data may bring new vulnerabilities. To mitigate the damage caused by a security breach, a business can benefit from cyber insurance, which covers a broad range of cyber risk losses that may unexpectedly arise from cyberattacks.
Cyber insurance uses predictive analytics for identifying the risk of attacks such as hacking and the use of malware. Its visualization solutions serve as detailed user interfaces for users to grasp the nature of a cybersecurity threat. The system also logs all activity to navigate and investigate recent attacks.
Main spheres to employ AI first
Key insurance fields keep up with technological advancements. To allow greater precision and speed, they have already integrated chatbots, AI-based fraud detection solutions, and other AI applications into their business models.
Along the same lines, picking the most effective health insurance coverage is crucial in the world where price and complexity of health insurance have been growing.
Mainly, AI influences health insurance cost efficiency. Insurance companies kit out their customers with new platforms which select the best-suited coverage for a user, aimed at their healthy lifestyle promotion. Meaningful insights from different data to determine the profile of each client ensure greater accuracy and personalization.
With this burst of technology and the growing presence of the IoT, people take more control over their day-to-day health needs and more actively participate in their health and wellness. This willingness is spreading into the areas of AI and robotics to move the healthcare focus to preventative care.
The other benefit of AI in insurance is sorting out real medical claims from the deceiving ones. AI systems can analyze medical applications and detect patterns that may signify health insurance fraud or underutilized services. To date, fraud makes up to 7-8% of the overall medical claims. For a human to verify every suspicious claim may be extremely challenging, but with these pattern recognition, details that previously went undetected are spotted immediately. Check more info AI in Healthcare.
By analyzing telematics data from vehicles with machine learning algorithms, AI insurance services create personalized risk profiles for drivers.
Some insurers use collected data to give discounts to the drivers with safe driving habits and penalize dangerous behavior such as speeding or hard braking.
Still, the main benefit of AI car insurance is that in case of an accident, the same data helps to assess damage in real-time with the help of a smartphone camera. AI insurance system is able to determine the damage severity, estimate repair costs, and analyze the accident impact on the driver’s future insurance premiums.
Machine learning mechanisms ensure the accuracy of such analysis, as they compare the received photo with its image database with thousands of images of car accidents.
Besides, API portals may combine public data with proprietary insurance data to enable the creation of better insurance products for customers.
According to Statista, the smart devices market segment involved almost $17B in 2019 and is expected to grow by nearly 20% by 2023.
Since artificial intelligence insurance can digest vast datasets at unprecedented speeds, one can get home insurance quotes from 15 minutes to even 60 seconds.
With the help of IoT, insurance policy prices can be calculated individually for each home’s insurance. It may also include smart home monitoring and emergency assistance, along with a home insurance policy.
IoT devices contribute to home disaster prevention. Compared to the old model disaster assessment, the new one is more precise. It takes into account plants, topography, and even how easily firefighters might be able to intervene. Fresh models assess natural hazards, condition of the property, and the customer’s past claims activity records. For example, it would be much harder to afford to live on the edge of a rock that is falling apart; you have to decide whether you can afford that.
Another AI-enabled measure aimed at risk reduction is moisture control. About one-third of all homeowners' claims are related to water damage. IoT moisture sensors can monitor home plumbing. The system not only alerts the homeowner; in many cases, it shuts off water flow to broken pipes. Some sensors can also trigger non-emergency alerts, such as a faucet being on.
Summing up: to AI or not to AI?
The best is yet to come for the insurance industry as there are still forms to fill in and policies to print out.
But now more than ever before, traditional insurance business models are flipped upside down, and businesses realize that to manage this unparalleled data growth, they should focus on the strategy of survival and prosperity. See our list of Top AI Companies.
Through consumer feedback and investigation, insurers will be able to identify where in-person engagement is most effective and where to employ artificial intelligence innovations. To stand to benefit, insurers will also need to decide where the data will reside and how to integrate the latest artificial intelligence innovations to harness this data and turn into value for the business.
That said, to thrive during disruptive times and augment technological capabilities, a custom elegant, practical AI solution can turn a traditional insurance service to adjustable, affordable, fast, and personalized.
If you are looking for help to unlock your business growth via meaningful innovation, that’s us!
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