The insurance sector thrives on risk assessment and its overall management, based on which insurance contracts are formed. Over the years technology has become integral to the insurance sector; getting insurance quotes can be as easy as clicking a button, managing coverage can typically be accomplished via a mobile app, and paper insurance cards are mostly a thing of the past. The insurance sector is observing a shift with a new technological wave characterised by new exponential technologies such as AI (artificial intelligence) and BI (business intelligence), which are creating changes in the demand side, where the behaviour of customers has changed and they now require other solutions. On the supply side, competitiveness has grown in this regard, thus, insurance companies are now ‘insurtech’.
The Insurtech sector includes those companies in the insurance sector that take advantage of the latest technologies and are committed to innovation and the development of new products and services to reduce costs, both for clients and the insurance companies themselves. It also seeks to improve operational efficiency and enhance the customer experience. It is closely related to Fintech, banking, and finance, and its development is taking place thanks to the momentum of digitization, the birth of startups, and applied techniques.
The use of artificial intelligence (AI) has rapidly expanded, with AI-enabled devices becoming commonplace in homes around the world. A Deloitte Digital report stated that, as of 2017, more than 35.6 million people in the U.S. alone have voice-activated AI assistants, and the worldwide spend on these technologies was expected to reach $47 billion in 2020. Additionally, with AI insurers can improve claims turnaround cycles and fundamentally change the underwriting process. AI also enables insurers to access data faster, and cutting out the human element can lead to more accurate reporting in shorter periods, which in turn leads to customer satisfaction and retention.
The deployment of AI in this sector has made it possible to make more accurate risk assessments by poring through more abstract sources of information and pulling pertinent information together to better assess the insurance carrier’s potential risk. More accurate risk assessments mean more appropriate premiums. In an industry where the largest difference between insurance companies is not their products but their prices as well as tangible and intangible services. Fraud is a major concern for insurance companies, and AI is a key watchdog in the fight against fraudulent claims. ents, fraudulent insurance claims cost insurance companies over $80 billion each year in the United States. To offset fraudulent claims costs, insurance companies increase premiums for customers. Insurance fraud detection AI is the key to reducing the frequency and cost of fraudulent claims for insurance companies and, ultimately, their customers. For example, if a person claims that their iPhone was stolen, a search-run through databases can be conducted to look for any previous suspicious activity. If any is detected, a red flag can be raised so that an expert can dedicate more time to this claim.
AI technology can detect risks that human investigators may miss. AI systems are also more efficient than humans at reading through records, which means they can process more data in less time and make fewer errors when they do so. Insurance companies rely on human inspectors to identify suspicious claims. This is also where BI comes in, as it supports every aspect of insurance data visualization – from operations and claims handling to sales and marketing. It analyses a colossal amount of data and then enables the display of the same in a digestible format to facilitate informed decision-making.
Business intelligence is particularly good at identifying trends and patterns across several operational functions. Claims handling is one of the most critical insurance functions when it comes to meeting customer expectations, as the last thing they want to deal with in their time of need is delayed payment or communication. In the insurance business, intelligence claims handlers are given a comprehensive view of processes and performance as they relate to claims. They can then use this information to review essential information faster and deliver the fastest service possible.
Key trends for the insurance industry with the thrust of AI that will cause the industry from repair to prevention will be – Streamlined Claims Processing; Accelerated Claims Adjudication; Rapid Document Digitization with OCR; and Faster and More Accurate Underwriting. AI and its related technologies will have a seismic impact on all aspects of the insurance industry, from distribution to underwriting and pricing to claims. Advanced technologies and data are already affecting distribution and underwriting, with policies being priced, purchased, and bound in near real-time.
More volume and quicker straight-through processing are what insurance providers want. In 2023, players can expect greater use of AI to improve the stitching together of key but disparate data silos, submission-to-quote processes, the digitization of submissions, the structuring of documents, and the preparation of information. Rapid advances in technologies over the next 10 years will lead to disruptive changes in the insurance industry. Companies that adopt new-age tech to develop innovative products, harness cognitive learning insights from a myriad of data points, streamline processes, and more importantly, personalize the entire customer experience will be the winners in the AI-dominated insurance space.
(The author is Mr. Piyush Goel, Founder & CEO Beyond Key and the views expressed in this article are his own)