Today, AI technologies are rapidly reshaping the way businesses operate across industries. In particular, Artificial Intelligence (AI) is bringing about a revolution in the insurance industry – helping P&C insurers keep up with customer demands, operating requirements, and competitors. Insurers are utilizing AI technology for use in customer service and claims handling, certainly, but also in areas like fraud prevention and analysis. So, what does that mean for you, the customer? Let’s take a closer look at the ways AI can help insurers save money.
AI and insurance: The consumer is key
For insurers to best utilize the capabilities of AI, they must first look at the expectations of a modern consumer. Everything today must be fast, but it must also be authentically personal. Experts agree personalized experiences are the new status quo, but delivering them at current market prices will be next to impossible without AI. Everything from claims to underwriting and data analysis can be impacted, streamlined, and optimized to improve customer service and internal operations. Nigel Lombard, CEO and Founder of Peppercorn AI, theorizes that “…while the use of AI in insurance is still in its early days, adoption will accelerate over the next one or two years. Insurers that aren’t adopting the technology will be in trouble, as they’ll be stuck with high expense ratios.”
According to businessnewsdaily.com, artificial intelligence improves several insurer trouble spots while simultaneously benefitting the customer. Here’s how:
- Artificial Intelligence (AI) can help insurers assess risk, detect fraud and reduce human error in the application process. The result is insurers who are better equipped to sell clients the plans most suitable for them.
- Customers benefit from the service and claims processing that AI affords.
- Some insurers think that, as machine learning progresses, the need for human underwriters can become a thing of the past. However, that day might be years away.
6 ways AI helps insurers save money
Popular insurance industry AI applications range. From risk management, fraud detection and prevention, personal offerings and customer churn (attrition) reduction to climate change impact prediction. On-demand and Usage-Based Insurance (UBI) offerings will be driven by AI’s ability to aggregate disparate data sources and ultimately, deliver more flexibility to customers.
Below is a summary of some viable use cases where AI is impacting the insurance industry:
1. Deliver efficient customer service support
More insurance companies are investing in chatbots as an integral part of their customer service to improve response time and save operational costs. As customer service bots resolve simple queries quickly, your team saves time handling complex queries and improve team productivity. The technology can be used to automate first-point-of-contact for customer enquiries, freeing up human customer service agents to handle more complex queries.
Here is how AI in insurance helps to deliver excellent customer service:
- Resolve FAQs
- Learning customer behaviour patterns
- Faster response times
- Utilizing natural language understanding
2. Claims fraud detection and prevention
AI can combat a huge money pit in insurance – fraudulent claims. Intelligent systems can spot irregularities or patterns in data and alert insurers to possible fraud. Here is a look at some ways in which AI in insurance is making a difference in fraudulent claim detection and prevention:
- Big fraud schemes: Deployment of AI for insurance, internal and external databases contain data points that can be thoroughly cross-referenced for analyzation. It is a great way to simplify insurance fraud detection.
- Fraud patterns: Using AI in insurance for fraud detection will become much more convenient.
AI fraud detection can also help insurance providers reduce the number of legitimate claims that get accidentally identified as fraudulent. Known as false positives in the industry, these errors can be identified and pay out for genuine claims can occur more quickly. The use of AI to detect fraud or crimes is something that has been successfully done in other jurisdictions, and is now being implemented in Canada.
3. Insurance pricing and underwriting
Underwriting is an essential part of the insurance process. It is here that insurers assess risk and determine premiums to accept those risks. Evaluating and pricing risk requires extensive research on the risk profile of each customer. Consequently, manual underwriting is time-consuming, prone to errors, and can lead to inefficient pricing. It is why AI is the right fit for underwriting and risk pricing processes. With improved risk selection and pricing, carriers can deliver customer experiences to you that are fast, easy, and intuitive. Your insurer can also offer the best-fit policies based on your unique requirements.
Listed below are key ways AI in insurance improves underwriting:
- Efficient application processing
- Better risk assessment
- Deliver frictionless customer experience
- Improved profitability
4. Accelerated claims processing
Meghana Nile, CTO for Insurance at Fujitsu, views AI as a valuable instrument in claims handling. “Customers want an omni-channel experience, which is much more achievable with the help of AI. It makes self-service claims processing much easier, dramatically improving customer experience.” Insurance AI systems can assist customers with the submission of claims, by guiding them through the claims process. Claims processing software powered by AI can process claims, assign an agent, assess coverage levels, and create follow-up tasks. It allows you insurer to stay in contact with you throughout the claims process. This reduces cycle times and gets customers the help they need quickly. This, in turn, improves their relationships with their insurers and their insurers’ reputations in the market.
Claims settlement is one area where automated technology is increasingly playing a significant role. In auto insurance, insurers can use AI to assess simple claims in just six seconds based on smartphone photos sent by the customer. This is in comparison to humans who take an average of six minutes and 48 seconds with the same information.
5. Personalized recommendations
When it comes to buying insurance, the majority of us misjudge the amount of coverage we need. As a result, we take out the wrong policy and leave ourselves with either too little or too much coverage. This is one way that AI can help achieve savings. We all have different needs, preferences and lifestyles. As a result, we’ve come to expect personalized policies, loyalty programs and recommendations, based on our individual preferences. Insurers are starting to provide tools that offer personalized insurance plans. This is based on Machine Learning and Artificial Intelligence models trained on individual customer preferences. Some of these tools include:
- Deploying insurance chatbots
- Creation of virtual
- Voice bots can engage with customers and promote personalized offers
- Individualized recommendations of coverage tailored to each person
Engaged and satisfied customers are 80% more likely to renew their current policy.
6. Prediction of customer churn
Most businesses will tell you that it is easier to keep a client than it is to acquire one. The acquisition cost of new customers in the insurance industry is substantially higher than in many other sectors. AI can recommend coverage levels by analyzing previous customer interactions. It can also look at the buying behaviours of others with similar profiles. Therefore, utilizing massive amounts of data, AI can help you identify your best coverage. AI also has the potential to use predictive analytics to analyze demand, create new products, improve pricing precision, and even determine changes to customer risk. According to experts, predictive AI will be the next step once AI becomes more mainstream. Currently, this area is still in its infancy.
Does AI in the insurance industry benefit the consumer?
Adopting an industry-wide technology usually reflects benefits to the companies that implements it, not the consumer. That is not the case with insurance industry AI. This means clear advantages for you, the consumer. For example, AI-assisted risk assessment can help insurers better customize plans so that you will only pay for what you need. Additionally, it can minimize human error in the application process, as well. Of course, it can also expand your insurer’s customer service options and streamline its claims approval process. The end result is that as their customer, you will only get what you need.
Nigel Lombard, CEO of Peppercorn AI, believes that artificial intelligence can help you pay lower premiums and receive more tailored coverage. “By putting the customer in control of the conversation, they’re able to ask the right questions and AI can pick up on verbal triggers that ensure customers have the right cover in place. This can result in fairer pricing. Lombard adds, “Furthermore,…AI can also result in leaner operational costs and lower expense ratios, which can ultimately be passed back onto customers.”
How AI can help insurers save money: A summary
Insurance is undergoing a digital revolution. As a result, the insurance industry has only just begun its foray into AI. Companies are already experimenting with new ways to incorporate it into their day-to-day operations. AI is streamlining the insurance process to connect you with carriers more efficiently and with fewer errors. Overall, it is inevitable that AI is creeping into the insurance world. If used correctly, AI can ultimately help insurers save money. If you want to learn more about what isure can do to help you customize your insurance, contact us for more information.