How Artificial Intelligence (AI) Is Transforming the Insurance Sector

by | Published on Jan 23, 2020 | Business Process Outsourcing

The emerging, mounting capabilities of Artificial Intelligence (AI) are transforming the way businesses are functioning both internally and externally. Several advances in AI technologies have truly reformed information systems and can replace analysts, personal assistants, and customer service reps. Insurance, which happens to be an industry that is predominantly built around risk, is no exception in this regard. The insurance industry is in the initial stage of adopting Artificial Intelligence. According to estimates, about 75 percent of insurance companies feel that AI will alter or transform the industry overall. The automation of services and digitization offer multiple opportunities to increase efficiency, offer new services, build better customer relations and combat fraud. To undergo digitization, the support of data entry companies is crucial as they help in converting data into digital format and ensuring accuracy. AI within the insurance industry has overhauled the claims management process by making it faster, better, and with fewer errors. Insurers now have the option of achieving far better claims management by utilizing this innovative technology.

(AI) Is Transforming the Insurance Sector

When it comes to insurance companies, the general perception among the masses is that it involves tedious processes with little room for customer convenience. With minimum innovation strategies, customer experiences are usually of low quality. Outdated and time consuming processes are pervasive in the industry, thereby causing considerable delays in the outcome. However, with the emergence of AI, there can be hope for respite. From the use of smart chat bots offering quick customer services round the clock to an array of machine learning technologies that spruce up the functioning of any workplace through its automation power, the expanding potential of AI within the insurance sector is already being utilized in many ways. With improved awareness and resources about the game-changing influence of AI in the Insurance industry, the initial hesitations and discomfort around its implementation are now fading quickly as it begins to trust in the caliber and numerous opportunities brought forward by Artificial Intelligence.

Role of AI in the Insurance Industry

In 2017, Artificial intelligence has shown its substance in various business verticals by creating a controlled, digitally enhanced automated environment for maximum productivity. However, as of today, insurance companies face several major challenges like –

  • Reaching out to prospective customers at the right time
  • Offering the right set of products that match customer requirements
  • Fastest claim support to loyal customers
  • Rejection of spurious claims

Insurance companies are striving hard to develop a technologically advanced system that helps keep all their employees including agents, brokers, claim investigators and other supporting teams synchronized. These employees combined with redundant internal processes create layers of confusion within the insurance ecosystem. For that reason, to make the system more advanced and efficient, it is important to opt for stable and consistent AI-powered solutions that can provide customers with a clear value proposition.

Over the decades, there have been no significant changes adopted within the process of claim filing and minimal improvisations have been noticed. The entire process is heavily paper-based and highly dependent on a specific employee execution. This process not only frustrates the customers and companies filing the claims, but is quite intimidating for the employees as well.

The introduction of artificial intelligence (AI) has considerably revolutionized the insurance industry. With the advent of mobile technology, huge data availability, quick processing needs and abundance of open-source software, the concept of Artificial Intelligence has gained huge significance within the industry. The need for massive data storage capacity and super fast data transmission has led organizations to hire data processing services, which help convert all critical documents into digital format for better work efficiency.

Let’s have a look at some major areas in the insurance sector where Artificial Intelligence use could be significant-

  • Faster claims settlement – One of the most important factors that determine the overall efficiency of an insurance business is how successfully and speedily it manages to settle the claims process. Introduction of AI dramatically boosts these processes. Insurance companies have massive amount of data. The need for massive data processing and superfast transmission has led insurance companies to hire data processing services which help process all critical documents into digital formats for better work efficiency. AI can help generate structured sets of data to organize claims and process them faster. Intelligent solutions can recommend templates for incoming claims, assisting insurers to capture all data in one go. Speech-based claims can be converted to written text with the support of an AI device, making documentation and claims management easier and more efficient.
  • Fraud analytics – Reports suggest that about 10 percent of claims expenditure for insurance companies is related to fraud. By using predictive analytics, AI can identify fraud better than a human adjuster. AI can help insurance organizations enquire about the alleged events of an accident while claims processing. For instance, if a car driver claims their vehicle broke down due to bad weather, the AI software can easily confirm the weather reports. Fraud claims can be prevented as AI software will confirm if the asserted claims are true or not.
  • Lead management – AI-based technology can assist marketers and sales people in pointing out leads by extracting valuable insights from data which may have been left out. Insurance companies can gain a competitive advantage by tracking leads and managing them with an AI-enabled solution. In addition, AI can also help enrich data with information collected from social channels or weblog streams.
  • Intelligent virtual assistants – Chat bots have been assisting live agents in companies for a while now. The natural language processing and sentiment analysis technology help build up the initial communication with the customer without having to resort to human employees. This approach allows to move the entire interaction between the company and the client online, dramatically decreasing operational costs and thus lowering the price of premiums. By using AI and machine learning, chat bots can interact with customers seamlessly. A bot can walk a customer through a policy application or claims process, reserving human intervention for more complex cases. Customers appreciate point-and-click interfaces and with advancements in natural language processing, AI solutions will be well-equipped to handle more complex communications with users.
  • Automated input management – An automated and intelligent input management solution can help insurance companies manage their growing database and make the available information more useful. By using unique processes like input recognition, routing, and clustering, it is possible for insurance companies to avoid manual data handling and data management. In short, efficient input handling will automate the routing of issues to the right solution provider within an insurance company.
  • Advanced underwriting – IoT and tracking devices give in valuable data which can be used for determining insurance premiums correctly. Fitness and vehicle tracking systems in both health and auto insurance sectors have given rise to the dynamic, intelligent underwriting algorithms that smartly control the way premium is dictated. By using AI and machine learning, insurers can save a lot of time and resources involved in the underwriting process and tedious questions and surveys thereby automating the whole process. For instance, “MetroMile” a US-based start-up, has established such a dynamic underwriting system known as ‘Pay-per-mile’ – which determines the insurance premium based on the usage of car. In this system, an AI-based device installed on the vehicle by the company uses a special algorithm to monitor miles, jerks, collisions and frictions, speed patterns and other car struggles on the road. The system collects detailed data essential to decide whether or not drivers deserve low premiums.

While more and more challenges appear to alarm the present market, insurers need to recognize the immense, hidden potential of AI in the insurance industry. To reap the full range of benefits, insurance companies need to devise an enterprise-level strategy to implement AI in such a way that it offers more than just customer experience. Not only will it improve the overall customer experience, but can also provide valuable savings by reducing labor costs, identifying fraud, and managing risk. Error-free data entry services along with AI can help consolidate data, reduce the total expenses, enhance customer experience, and substantially reduce fraud.

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