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Artificial intelligence (AI) in the insurance industry has become the new normal these days. Although the implementation of Artificial intelligence in the insurance industry is still in its early stage, the industry has made significant progress in its implementation. In this article, we shall discuss the significance of AI in the insurance industry.
In simple words, AI is a set of computerized tools designed to achieve objectives that require human intellect. AI can interpret data and is able to perform a variety of tasks. It is able to perform operations in a cheaper, faster, and accurate way. Various industries can use AI to analyze data on customers to predict customer behavior, understand preferences, and optimize price and product offerings.
Insurance is a highly regulated industry, and due to this factor, insurance companies have been slow in adapting to the new technological changes as compared to other industries. Even after the advancement of technology, the insurance industry has continued with paper-based manual work that is relatively slow and requires human intervention.
Customers have to still wait for a longer period for getting a claim reimbursed or signing up a new policy. In order to avoid such a situation, AI in the insurance industry can cause a considerable change in the way work is done. It can play a critical role in ensuring a fast, cheaper and more secure process of business in the insurance industry. In the past, there have been instances where insurers have invested heavily in AI solutions. It is expected that more insurance providers will implement this technology across their business.
Apparently, the insurance companies have a lot of gain from investing in AI-based technology that can automate the process and enrich the service quality by helping the insurance agents to arrive at the right decisions.
Some of the areas where the insurance industry can benefit from the AI are as follows:
This is one of the most prominent areas where AI can benefit the insurance industry. With the use of AI, insurance providers can price their policies more competitively and personalize them for customers. An insurance company with the help of AI can get information about a person’s city and state and his or her financial situation to figure out how much they can afford to pay.
Insurance companies spend massive amount of money on claims personnel. By using AI, an insurance company can reduce their hiring spend by automating many time-consuming process around claims management and payouts. It can also help them provide more customized contracts for customers, depending on their situations.
The loss from insurance fraud accounts for close to 40 billion US dollars. With AI, insurance companies can find an effective way of dealing with fraud, thus preventing risk. Using it will help the insurance companies to detect any abnormalities in claims data and identify any false information which is used by customers to get a lower premium or a bigger claim.
Chatbots using neural networks can be used to understand and answer queries from customers. It can help in freeing a lot of time and resources for insurers that can be invested in other profitable activities.
Internet of Things (IoT) and tracking devices can yield a lot of data that can help in determining insurance premiums. With AI and machine learning insurers can save their time and resources involved in the underwriting process and tedious questions and automate the process.
With AI, analysis of customer can be done for providing tailored and cheaper insurance.
Some of the AI applications that have caused a massive uproar in the insurance industry are as follows:
To combat fraud insurers are using AI predictive analysis software to process thousand of claims. By analyzing the claims, AI is able to identify which may not be legitimate, thereby reducing the number of false claims.
Bu automating many insurance companies is also advancing their customer profiling capabilities. It helps them to build a more comprehensive picture of their customer.
Insurers use machine learning to discover customer trends in real-time by streamlining and speeding up the collection of data. These insights are then used to develop and improve product and policy design.
The underwriting process is viewed as an art based on personal judgement, but AI-driven technology has also made its way into this area of insurance, making the process scientific.
AI has the potential to transform the insurance experience for the customers by providing what is fast and affordable service. Tailor-made insurance products that are as per the needs of the customer will attract more customers at fairer prices.
As more and more insurers use AI technology, we may see insurance become more personalized because they would understand the needs of the customers. Insurers would be able to realize cost savings by speeding up workflows. It would also help them discover a new revenue stream as AI provides new business opportunities and cross-selling opportunities.
The AI solutions mentioned above can ease the communication process where the customers can easily communicate with the insurance companies. It would most likely cause people to buy insurance.
Also, read: Use of BlockChain in Insurance Sector: Benefits and Challenges