AI in Insurance

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The insurance sector is one that thrives on predictability, with outcome certainty, insurance companies are able to offer fair rates. Although this is a sector that’s taken a lot longer to adopt new technologies and processes, change is definitely on its way.

The insurance sector is disrupted like never before with the introduction of global megatrends such as climate change and the arrival of self-driving cars. To be successful in the insurance industry it’s all about certainty and knowledge which brings security and survival. AI has started to provide insurance companies with knowledge, risk awareness and insights.

We are seeing disruption in all aspects of insurance from home, motor, health and beyond. AI can move this industry away from its time consuming, paper-based processes and start shaping it to one that meets the demands of customers.

In this article, we’ll look at some of the transformational shifts we are seeing in the insurance sector.

Key AI trends in Insurance

Behaviour based premiums

One of the biggest shifts is moving away from grouped policy based insurance (he’s an 18 year old boy, so must be a boy racer) to behaviour premiums (he’s an 18 year old boy, but only drives to the library on Tuesdays and the Church on Sunday) based on real events in real time, around the individual rather than a group of individuals in that category. This is being made possible thanks to IoT sensor data. The clear advantage here is that safer drivers and drivers driving less miles, pay less for their premium. The potential downside here is that drivers need to install telematic sensor in their vehicles to share their data and biometric information with insurers.

Here are some technology companies leading the way with behaviour based motor insurance;

We are seeing a similar pattern with smart home insurance, where smart sensors and cameras detect problems, keeping you connected to your home and alerting you to your smart phone with issues as they occur. This all then being linked to your home insurance to bring down premiums. With this we are seeing insurance companies becoming or merging with hardware companies to offer the insurance as a service.

Here are some technology companies leading the way with smart home insurance;

And finally, we are seeing this with health and life insurance where wearables are connected to your insurance, bringing down your policy and offering further incentives for those that keep fit and healthy.

Here are some technology insurance companies leading the way with fitness tracking life insurance;

Customer Experience & Personalisation

Leading Insurance companies such as Zurich and Legal and General are offering innovative AI solutions to attract new customers. You can now sign up for life insurance by taking a selfie on your mobile phone. Using facial analytics technology & life science techniques, AI detects your age and offers up an estimate for your monthly premium. Users are then connected to an online portal where they can complete the application.

Here are some technology companies leading the way with facial analytics insurance;

AI allows insurers to spend their time and efforts on more profitable activities as customer service, claims processing and underwriting is all made automated. Chatbots can massively improve customer service as they provide 24/7 help and allow insurers to focus their time elsewhere.

AI technologies, such as chat bots, are being used to improve engagements and customer service in the insurance industry. Interactive chat programs use AI and machine learning to direct customers to solutions and answer common questions.

Here are some technology companies leading the way with Conversational Chatbots;

Improved Risk Detection

With the use of AI-driven technologies the risk can be massively decreased as it spots fraud patterns therefore reducing fraudulent claims. Equally these technologies could also increase insurers profits as it’s used to improve company risk and actuarial models. In the US, on average, fraud costs the insurance industry $40 billion a year. This seriously highlights the importance of AI technology to detect and prevent fraud.

Here are some technology companies leading the way in reducing risk with AI for Insurance:

AI Powered Claims Management

One of the most important considerations for people taking up insurance (other than the cost), is the time and efficiency in which claims are settled. Using AI, the amount of claims that require human analysis are reduced. This reaps a lot of benefits such as lower costs, time saved and also improved customer service as customers claims are resolved significantly quicker. One Insurance company powered by AI and technology is Lemonade. Lemonade claims to set you up with insurance in seconds and pay out claims in minutes.

Here are some technology companies leading the way with AI Powered Claims Management:

Sales & Marketing for Insurers

Another area that insurance companies can benefit from AI, is in sales and marketing. Reaching out to customers at the right time and offering the right suite of products that suits the customers requirements is of huge importance. Machine learning not only can recommend useful products to customers but also allows policies to be priced more competitively and relevantly. This helps tailor policies to individuals based on their own needs and lifestyle which increases its appeal to a wider range of customers.

AI uses insights from competitor, marketplace and consumer data to create better demand forecasting as well as forecasting industry shifts which aids with pricing and promotional planning.

Here are some technology companies leading the way with AI driven sales and marketing for insurers;

Is AI the Future of the Insurance Sector

As AI technologies advance, we will see it begin to take over the insurance sector, transforming it into a fast, on-demand, more affordable process for customers. Combining AI technology and the mountains of data at insurers disposal already, will lead to flexible insurance. This includes premiums that adjust to accidents and health and pay-as-you-go insurance. This will allow insurance to become more personalised as AI will be able to accurately determine the customers needs.

In the long term, AI-driven analysis will reduce overall costs and speed up workflows, which opens up new business and cross-selling opportunities.

Although these changes will require individuals with skills and new processes to bridge the gap between business and technology, the benefits of implementing it are enormous. Additionally AI solutions open an easier line of communication between customers and insurance companies which could see a spike in sales. Get ahead of the trend and start blending AI into your workplace with the help of Geniusly.

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