AI can change how insurers price, process, and develop policies
Artificial intelligence can…
- Analyze customer data to create individualized services and products
- Help insurers predict outcomes to develop the right products for customers
- Predict risks, improve pricing, and streamline the underwriting and pricing process
- Be trained to detect anomalies and suspicious activity related to insurance fraud
- Help insurers spot new technology trends to make changes to policies
Artificial intelligence (AI) has already made a huge impact on many different industries. It’s changed the way we shop, search, work, and live. While you might think it only affects tech companies, search engines like Google, and e-commerce retailers like Amazon, many experts actually expect it to transform the insurance industry in the next decade.
AI technology will make it easier to serve the interests of customers, but there will also be challenges ahead. We chat about five ways it could transform the insurance industry and enhance the customer experience at every touchpoint.
How artificial intelligence works
AI technology “…enables computer systems to accomplish tasks that typically require a human’s intelligent behavior.” AI, also called “machine learning,” allows computers to analyze huge amounts of data incredibly fast to come up with solutions to problems. It’s transformed the way companies collect and use consumer data to enhance customer experiences by analyzing and understanding their habits.
AI has disrupted nearly every industry. You’ve probably heard that algorithms drive your experience on social media platforms, e-commerce stores, and search engines. Data can also be used to create solutions for customers, partners, and employees.
Artificial intelligence has already transformed businesses and retail. Likewise, it could have a big impact on the insurance industry. It could transform many areas of the insurance industry, including underwriting, customer service, claims, marketing, fraud detection, and future technology.
1. AI and the customer experience
Artificial intelligence analyzes customer and client data to create more individualized services. Many insurance companies have already invested in technology like chatbots. These virtual assistants can answer questions, give advice, check billing and payment information, and even make transactions.
Some platforms are capable of monitoring customer interactions across a variety of platforms. Their machines can then “learn” to identify negative outcomes and change their language and behavior to ensure customers have a satisfying experience. Other platforms allow users to speak and interact with chatbots as if they were real people. These systems can also detect user intent and ask follow-up questions to ensure customers get what they need. Meanwhile, real-time and geo-tracking technology can analyze customers’ driving habits to provide the most accurate premium information.
2. AI and claims management
AI can assist in the areas of claims management in a few different ways.
First, it can help insurance firms remain compliant with state and federal regulations. Claims and costs are driven by regulations and compliance. AI can enhance tax and financial reporting, ensuring the accuracy of figures/documentation. It can also make sure data processing procedures are followed to ensure transparency and compliance.
AI can help insurers streamline workflows and answer questions faster. This helps insurance teams identify and predict outcomes to come up with the right products and services for customers.
3. AI and predictive underwriting and pricing
AI-enabled predictive analytics and automated systems can generate quick insights about customer behaviors and trends. This data can analyze and predict risks, improve pricing accuracy, and streamline the entire underwriting process.
Insurers can also use AI to analyze the data of competitors and other industry organizations. This enables insurance companies to develop competitive pricing while personalizing policies according to the unique needs of each customer. It can gather data regarding location, age, health status, marital status, profession, assets, and other information to make predictions about the likelihood of a customer filing a claim. Policies and premiums can then be created based on defined criteria.
4. AI and fraud detection
According to the FBI, insurance fraud adds up to more than $40 billion per year. It costs U.S. families between $400 and $700 a year due to increased premiums. There are many types of common insurance schemes. They include:
- Premium diversion – Embezzlement of insurance premiums
- Fee churning – A series of intermediaries claim commissions through reinsurance agreements
- Asset diversion – Theft of insurance company assets
- Workers’ Compensation fraud
- Natural disaster-related fraud
- Disaster fraud schemes
- Organized criminals who engage in fraudulent business activities
Fraud is often difficult to detect. Artificial intelligence models can be trained to recognize anomalies and suspicious patterns regarding claims. This can enable insurers to identify fraud attempts before they’re successful.
5. AI and future technology
The world is always changing and bringing the next big tech trend on the horizon. Some of these changes will dramatically alter how insurance companies do business. AI can help insurers spot trends and behaviors to make internal changes.
One technology that could disrupt the auto insurance sector involves self-driving or autonomous cars, for example. In theory, autonomous cars can help reduce accidents and make driving safer. Reducing injuries and fatalities is a good thing, of course, but it might mean insurers will need to reevaluate what to include in auto policies and how they are priced.
Taking care of your needs now and in the future
AI continues to advance and could bring big, beneficial impacts to the insurance industry. No matter what the future brings in terms of technology, Avante Insurance will always seek to provide the best service and insurance products to our customers. We offer both personal and business insurance solutions.
If you have questions about your insurance needs, contact us and request a quote. We will ensure you have the right coverage to protect your personal property and business assets.
This blog and website are made available by the publisher for educational and informational purposes only. It is not to be used as a substitute for competent insurance, legal, or tax advice from a licensed professional in your state.