Automation is the key to innovation in the current market across many industries. Driven by technologies such as the Internet of Things (IoT), big data, and cloud processing, automation can be incredibly lucrative for many businesses, insurance firms included.
At the heart of it all is artificial intelligence (AI) and machine learning (ML). Data flows in at unprecedented levels and the AI system uses that information to take action. Every day, AI and machine learning platforms become more sophisticated and more capable.
One major question is when the technology will truly take hold in the insurance world. More importantly, how will AI transform the industry for the better?
1. Advanced Claims Settlements
Recently, filing insurance claims has become faster and more effective for clients thanks to online platforms and related systems. AI will accelerate that efficiency even more, and it will take on many tasks in the process.
Conversational AI will be used to take, respond to, and assess customers’ claims, whether online or over the phone. The system will then investigate, using a trove of available data and historical information, before passing on the details to a representative or claims agent. After a disaster, business owners can take photos of damage on a mobile device and share them with an AI agent. Or, they can file claims directly from a mobile app in minutes.
This speeds up the process considerably because agents only need to spend time looking over the compiled reports. And when they do have to conduct an investigation, there are usually fewer details to study “manually.”
2. Streamlined Underwriting
Traditionally, insurance companies required an inordinate amount of information to create a customized policy with estimates. Thanks to always-on services, on-demand data stores, and access to a trove of personal information online — social media, for example — underwriting can be completed in mere minutes. Machine learning tools provide all the information an underwriter needs, creating blazing-fast assessment and development phases.
The entire system can be improved even further with the help of conversational AI or chatbots. The tools can ask for and collect all the pertinent details from potential customers, including addresses, the net business worth, size of the company, number of employees, health stats for life insurance, and much more.
Plus, these tools are available 24/7, so the data collection process can begin after-hours, opening up new opportunities for onboarding.
3. Smarter Coverage
The core concept of insurance is providing customers a safety net. Yet, one of the more challenging aspects of insurance is creating plans or policies that provide just the right amount of coverage without crossing upper or lower boundaries. You don’t want too much, but you don’t want too little, either.
AI can be used to create incredibly nuanced or customized protection plans, allowing insurance providers to create entirely new and unique programs. These plans can be tailored to business liabilities, property concerns, and even income.
Financing, rates, coverage, and claims scenarios can all be assembled and analyzed in minutes to produce a highly personalized insurance policy for every client. Personalization like this results in more affordable plans that match any specification or situation.
4. Repair and Claim Cost Estimations
One company, Tractable, has developed an AI solution for accident and disaster recovery. The AI assesses car damage through visual analysis of uploaded photos to estimate repair costs in real-time. This allows insurance companies to get a better idea of how much a claim will be, and it also significantly speeds-up claims processing.
These kinds of solutions will become more widespread, not just for assessing automotive damage but all kinds of claims activities, including flooding or natural disaster damage, customer health concerns, business or property appraisals, and beyond. Small business owners don’t have to stress over complex claims, as everything is handled by AI. They also provide estimates and quotes in real-time, with incredible accuracy.
5. Fraud Detection
About 11.8 million Americans have admitted to lying to insurers, which is down from 2018. But it’s still a significant number. It’s most common with auto insurance, followed by health, life, home, and disability insurance policies. Income protection and renter’s insurance are also common, which are major concerns for business policies.
To combat this, insurers can enlist the help of AI and machine learning solutions, which leverage predictive analytics to detect fraudulent claims. Fake identities and falsely reported information can be spotted much faster, alongside payment or transactional fraud, invoice fraud, and claims fraud.
With business insurance, the implications of this are much greater, because companies generally have more expensive assets with higher net values. If they lie or embellish numbers, there’s more on the line.
Overall, the system has administrative access to data with the opportunity to see the bigger picture — something most claims agents either don’t have access to or can’t assess as accurately. Most importantly, AI-powered solutions do it faster than any human. The faster claims and assessments go, the faster a business can get back on track.
6. Behavioral Policies
We’re starting to see usage and performance-based policies much more often in the insurance world, especially among auto insurers. With auto insurance, for example, customers are given a small electronic device that plugs into their dashboard. It regularly assesses their driving performance by identifying potential risks and events, which may or may not affect their coverage.
The data collected by these devices goes to a central system, usually a remote server, where it can be processed by an AI. In turn, it allows insurers to create an accurate profile of their customers to assess risk, provide policy updates, and create personalized quotes.
This can also be applied in the business world to discern risk, traffic and event scenarios, and to ensure everyone is following the set guidelines. If a business owner or employees are not properly securing assets, for instance, the provider will know.
It’s About Time for an Upgrade
AI is poised to transform the insurance industry. Through automation, real-time information streams, and data-driven intelligence, AI can significantly speed up traditional insurance processes like underwriting, policy generation, and customer service. Moreover, because it will lead to smarter and more effective policies and solutions, there’s a lot of potential for cost savings.
It’s time for the insurance world to catch up or get ahead of the curve, and both AI and machine learning are the perfect catalysts for doing so.
Devin Partida is a small business and technologies writer, whose work has appeared on Due, Boss Magazine, and other industry publications. She is also the Editor-and-Chief of the tech magazine ReHack.com. To learn more about Devin, please visit her professional portfolio here.