Artificial intelligence, machine learning and deep learning are trends that can make insurance shift from its current state of ‘detect and repair’ to ‘predict and prevent’, transforming every aspect of the industry in the process.
As AI becomes more deeply integrated in the industry, carriers are positioning themselves to respond to the changing business landscape. Insurance executives are exploring the factors that will contribute to this change and how AI will reshape claims, distribution, underwriting and pricing. With this understanding, they can start building the skills and talent, embrace the emerging technologies, and create the culture and perspective needed to be successful players in the insurance industry of the future.
AI can and will disrupt the whole insurance value chain, from customer engagement to underwriting and claims management. Add to this, the hybrid power of artificial intelligence and blockchain technology and we'll soon start seeing solutions being developed to speed up processes in record time thanks to groundbreaking capabilities such as intelligent claims-routing and self-learning fraud detection.
Insurers can also boost their sales and distribution by using machine learning. Some of the benefits include:
AI is currently used in underwriting for extraction of insights from data sources, demand analysis automation, pricing and policy rating enhancement and natural language question answering. Therefore, insurers can expect more efficient underwriting processes by stream-lining through robo advisors, improved retention ratios and increased risk evaluation quality.
AI will give insurers an edge on how they manage claims too: faster, and with fewer errors. Insurers can achieve better claims management by using intelligent technologies to enable real time question and answer service, pre-assess claims and automate damage evaluation, enable claims fraud detection, predict claim volume patterns and augment loss analysis.
The customer service and policy administration workforce can make their lives easier by using AI to action external requests, automate call centre and webchat services, enable self-service on policy queries and process unstructured data.
Lemonade isn’t the only insurtech firm that’s built its business around AI and big data, and traditional insurers are also getting in on the act. Insurers are investing more than $5 million in AI each year, and are planning to transform many of their existing business processes over the next three years. It's set to be a transformative time in the insurance industry.
Omni:us digitise and analyse complex documents to streamline the claims handling and policy-quotation process. Shift Technology’s AI-driven fraud detection solution, Force, is already used by more than 70 insurers around the world. Companies such as Hanzo also offer web-crawling AI tools that can sift evidence of a fraudulent claim from social media accounts. Other innovative AI-based solutions include Guidewire’s Cyence Risk Analytics platform, designed to help the insurance industry quantify cyber-risk exposure, and Cape Analytics that uses AI and geospatial imaging so insurers can understand the risk profile and value of property assets.
In the longer term, the sky's the limit. Imagine a future in which you have a car accident and the car reports the claim for you. The sensors in your car will tell your insurer the nature of the damage and even how much the repairs will cost. Your insurer can then arrange a mechanic to start the repairs straightaway. Similarly, if something goes wrong at home, such as a water leak, sensors connected to the internet can switch the water off remotely, minimizing damage and reducing the cost of a claim.
Over the next pages, we look at real-life use cases of AI in the insurance sector, and hear from the experts on the challenges of implementation, management and company culture when it comes to truly leveraging the technology of the future.
