Leveraging AI For Insurance
Updated: February 25, 2020
Digitalization has changed the way we do business on nearly every level.
The rise of technology and in particular, machine learning, or artificial intelligence, has provided many new and exciting opportunities for every industry.
The businesses that will benefit the most from new advances in artificial intelligence are the ones that are open to the change and possibilities that technology can bring to their business.
Artificial intelligence simply refers to the way machines (computers) display significant intelligence and is enabled to understand its own environment and learn to achieve a goal.
Leveraging AI For Insurance
The insurance industry stands to play a big role in the implementation of machine learning.
While insurance doesn’t have a reputation for being the most innovative industry around, in the past few years, we’ve seen it come a long way and perhaps even making larger strides at a time than other industries taking several smaller ones.
Arguably, the insurance industry must learn to navigate its way through the new and developing world of artificial intelligence if agencies want to remain relevant and convenient to younger generations, who need insurance.
Check it out: How To Automate Your Business Process: The Software You Should Be Using
So, while many insurance agencies have begun to implement AI and may be off to a good start, there is much more to do.
The next step towards paving their future as a business, is to leverage that technology to use it to their advantage and realize the full potential of machine learning.
The goal of leveraging artificial intelligence is to make work processes much more accurate and efficient for agents and customers alike.
There are many ways artificial intelligence can be leveraged to make agencies more successful through claims management, fraud detection, and customer experience.
1. Claims Management
Anyone working for an insurance agency knows that there are copious amounts of data that are collected.
A large collection of data means basically nothing until it is organized in a way that is readable and serves a purpose.
Artificial intelligence helps improve the process of collecting and organizing data.
A machine can gather data and process it quicker than human hands.
Unlike human hands, it has the ability to expedite the entire process, gain more accurate insight, and new information is able to filter in quicker.
It’s without a doubt that AI’s greatest asset to insurance will be in claims management.
The time-to-settle metric plays a large role in customer satisfaction with their agency.
In 2017, Lemonade Insurance made headlines for settling a claim within three seconds, which is undeniably quick compared to a survey by JD Power Associates, whose number one ranked insurer came in at eleven days!
Talk about a speedy settlement.
2. Fraud Detection
On the back-end of technology advances, fraud is increasingly high.
Cybercrime becomes costly to the insurance industry when claims pour in each year.
Fraudulent insurance claims have cost insurance agencies large amounts of money in recent years that they otherwise wouldn’t be paying if there were better ways of detecting the fraud before a large pay out.
It’s estimated that each year there is $80 billion in fraudulent claims (Insurance Fraud).
The most common form of insurance fraud is identity theft.
Fraudsters steal data about someone’s identity for the sole purpose of filing a claim without their consent to gain money.
While fraudulent claims have been successful in the past, they have also affected the well being of other innocent customers sending non-fraudulent claims.
AI uses advanced algorithms to detect any inconsistency or quirk found in a claim, which improves the way agents are able to sort bad claims from valid ones, saving the agency both money and time as well as looking out for their trustworthy customers.
Check it out: How Technology Helps to Battle Insurance Fraud
3. Customer Experience
Many customers, especially ones of newer generations, are not very interested in waiting around on the phone for hours at a time to speak with their insurance agent.
They are looking for the most convenient and fastest way possible to file their claims or purchase a type of insurance.
AI can prove to be a huge help in customer experience and service areas.
Chatbots have becomes an increasing staple to many insurance agency websites.
Chatbots are programmed to use a type of language pattern to communicate with customers.
These AI bots are able to effectively answer customer questions, address complaints, and even review their claims, of course by using a fraud detecting algorithm.
While these chatbots are useful and improve the customer experience within insurance, they do not necessarily replace human agents.
When a customer has more specific questions or concerns that require the attention of an actual agent to have a conversation, the bot will direct the customer to an agent.
I don’t think AI will ever be able to replace that human interaction which is sometimes required, however it will help expedite many processes.
Aside from chatbots, AI can be used for behavioral policy pricing.
Through the use of data and analytics, there will be more personalized data pulled about each unique customer.
Therefore, safe drivers or people who lead healthy lifestyles will pay less for auto and health insurance.
Think of usage-based insurance and on-demand insurance.
Check it out: The Future of Insurance (Infographic)
“58% of insurers are focusing their AI implementation on customer experience.”
4. Image and Video Analysis
Part of the convenience customers are looking for today, include mobile device integration.
Having a mobile app for your agency to help customers initiate claims while on the go, is an appealing part of new technology.
Through mobile apps, customers can submit pictures and videos of their accidents to their insurer instantly.
This can be done for property as well.
AI algorithms can analyze the images and videos uploaded through apps and provide thorough risk inspection.
More recently, audio analysis has come in to play with home devices such as Siri, Google, and Alexa.
By identifying voice tone and emotions through non-verbal communication in an audio conversation, AI algorithms are able to red flag any part of an analysis that may be fraudulent.
IoT sensors and wearables are making their way into insurance as well.
Such as sensors in your car to monitor your driving habits to wearable tech that tracks your health, and smart devices in homes for added safety.
However, not all consumers are ready for this yet.
Unsafe drivers or just those who frequently speed won’t benefit from having a sensor in their car tracking safe driving habits and will ultimately lose out on a lower auto rate.
5. Reach Leads
Cold calling is a thing of the past.
In today’s world, customers have higher expectations for more personalized approaches.
AI scans customer data from their social profiles on the Internet and collects information to find customer trends.
By doing so, offers become much more personalized.
Customers are now often accustomed to seeing ads and offers that are relevant to their needs and preferences.
The insurance agencies that utilize AI technology to their advantage, are experiencing more of an edge over the competition.
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