When someone talks about artificial intelligence or innovation, the last thing that comes to our minds is the insurance industry. The reason for this is because most people can’t find a relation between insurance and high technology, yet it is one of the first industries to be affected by Al and data technology. The insurance industry is based on a big bubble of risks, these companies immeasurably depend on their competence of predicting what risk a person, company, or organization depicts. For making accurate predictions, they need information and data, and the more data they have the chance of them analyzing the risk increases. It will also help them save and increase revenue.
Insurance companies can benefit from artificial intelligence and big data technology by enforcing them in their work and getting the upper hand over the competition. But, the question is how AI and Data Technology will transform the insurance industry? Here are some of the reasons how.
Behavioral premium pricing
One example of how technology has changed the way things are functioning in the insurance industry are telematics and wearable sensors, devices capable of collecting customer information. For example, if this device is installed in a vehicle, it will receive information about how the customer drives, at what speed they go on average, how they use the brakes if they do over speeding, etc. All this information helps the company to create a profile about the client as a driver, so they can predict how risk he is and how likely he is to cause an accident. This technology is not just limited to car insurance, but other areas of coverage as well.
Currently, financial models are built on the past performance and statistical samplings, insurance companies, go through and study their client’s records and then make predictions based on that. But, with this new technology, they can access real-time information and use it for their benefit, this way companies will not only get accurate information but will also be able to save tons of money spent on expensive assessments and audits. It will also be beneficial for customers, as careful drivers will not have to pay extra money for less-careful drives, as the company will have individual information about every customer.
Did you know that the insurance industry is the first one to use facial recognition in their areas of work? Facial recognition is said not to have reached its full potential yet, but the applications it is offering currently are quite remarkable and impressive, and will only get better in the coming future. An insurance company named Lapetus offers its clients to buy life insurance by taking a selfie, an idea you must not have heard or thought of before. What the company does is run an analysis of the facial patterns submitted by the clients, and anticipates signs of life-threatening habits, like alcoholism or smoking. This technology behaves like an accurate predictor of a lifetime, and by making use of it, the company is saving their time and money spent on uncomfortable medical examinations.
AI interfaces and personalization
Modern business is all about giving customers an experience they will never forget, which includes customization. In the past, insurance companies use to offer their clients a limited set of options, which they had to choose from, but those days are now over. Like all other modern businesses, the insurance industry is also adopting the same techniques of customization. One example of this is Allianz1. It is a web interface where the insurance company has set their modules, and by that, the customers are allowed to build their insurance policies.
Faster claims settlement
The two main factors that determine how efficient an insurance company is are how fast it can manage to settle a claim, and how successfully it does it. Companies which are adequate in these two things’ are considered to be on top of their business.
Artificial intelligence technology is what advances both of these factors. As with its help, a company can achieve its goals in a week, which is impossible by even the best human specialist. According to a source, the United States is the largest insurance market in the world today. With China and Japan being the second and third largest markets, respectively. In the year 2017, Lemonade’s AI Jim broke the insurance industry record by settling a claim in less than three seconds, something only possible through AI.
A chatbot helps in building communication with their customers, without having to spend any money on employees. The insurance industry has been actively making use of such chatbots to improve the connections between the company and clients And save costs spent on operations, resulting in lower premium prices. Machine learning is also an ideal option for insurance companies that only work with their clients online. As it can help those counter frauds, and promise their customers a characterized experience.
Decreased fraud occurrence
According to insurance stats, every year, insurance companies report fraudulent activities of more than 80 billion dollars. With personal insurers, it is not physically possible to collect and alter all information about policyholders to help indicate a fraud. But, with artificial intelligence, this is very much possible and practical. Insurance companies that rely on AI can virtually process unlimited amounts of such information; this not only helps them in settling claims at a faster rate but also minimizes the chances of fraud. Furthermore, when companies use machine learning and other such technologies to determine fraud, they will have improved results over time. Which will help them perform in a much efficient manner as compared to the companies still relying on humans.
The introduction of artificial intelligence and data technology in the insurance industry is one great example of Digital Interruption. It has changed the entire course of the industry, and many believe it is going to reconstruct completely. With so much competition and modernization in the world, the insurance industry cannot be left behind and be conservative; they have to move ahead and grasp on to the changes as early as possible. The quicker they will accept these changes, the faster they will observe progress in their sectors of work.
The prediction for the next three years is, the insurance industry will experience a revolution with such technologies. And, this will only be a good thing for both the companies and the clients. As they will both benefit from its easiness and efficiency.