How AI is Changing the Traditional Insurance Industry
AI is a powerful tool with excellent potential for a positive impact on every aspect of our lives. The insurance industry, which is considered one of the most demanding and fast-paced industries, is also exploring AI use to automate manual tasks, prevent frauds, drive a better customer experience, and gain a competitive edge on the market.
As AI becomes more widespread in this sector, it proves how fast AI has changed the business landscape in this traditionally conservative industry. Below are some of the most significant impacts AI has had on the insurance industry.
Faster claims processing
Artificial Intelligence can streamline standardized, repetitive, and menial work operations, such as claims processing. Besides being repetitive and monotonous, claims processing is also prone to inefficiencies and errors, which can drive up the insurers’ operating costs. AI can be infused into claims management tasks to make them speedier, more agnostic, and less prone to errors. Artificial intelligence algorithms can process large volumes of data to enable faster claims settlement.
Insurers and salespeople can leverage AI to extract valuable insights from data to find new leads at a scale. They can figure out best-fit leads and personalize recommendations according to their purchase history and many other factors, helping the sales teams to interact more effectively with the buyers.
Insurance companies lose more than $40 bn every year to frauds and scams in the US. Common insurance frauds include – Application frauds, false claims frauds, forgery, identity theft, and inflation frauds. Artificial intelligence can process large volumes of historical data as well as existing external data quickly to detect patterns and find oddities that don’t fit in the patterns. AI can also continuously revise algorithms and training with the help of data to discover new fraud schemes in the future.
AI can enable insurance companies to personalize their policies for different customer segments and price them more competitively. By processing large amounts of data quickly and deriving valuable insights from it, insurance companies can better understand customers’ behavior based on different pricing strategies and their willingness to pay (WTP).
Intelligent Virtual Assistants
AI-powered chatbots can understand and answer the bulk of customer queries over chats, emails, and phone calls, freeing up significant time and resources for human workers. Insurance companies can automate their business processes across most departments to improve customer experience. Some functions chatbots can help insurance companies with are:
- Providing policy information to the user.
- Claims processing.
- The smooth functioning of payment service.
- Lead generation and conversion
What future holds for AI in the insurance sector
While AI is already being widely used in the insurance sector, it may dramatically change the industry in the foreseeable future.
- Insurance companies could use this technology to carry out virtual inspections after a claim is filed.
- IoT and other data capture technologies will replace the manual methods of first notice of loss, and repair services will automatically be triggered when loss happens.
- The majority of underwriting will be automated, and traditional underwriting will cease to exist.
The benefits of AI in the insurance industry are many and hard to ignore. As more insurance businesses begin to see its benefits and adopt it, the insurance industry may soon become more accurate, efficient, and secure.