Insurance
AI in Insurance Sector
For insurance companies finding and building customer relationships and managing risks are key to creating a growing, profitable business. Companies that are making extensive use of AI are reaping the benefits of increased customer satisfaction and loyalty while decreasing fraud which adds to their bottom line. These companies are using AI for a number of scenarios including risk management, fraud detection, customer retention, and optimized marketing. Ubiquitous Internet of Things (IoT) sensors will provide personalized data to pricing platforms, allowing safer drivers to pay less for auto insurance (known as usage-based insurance) and people with healthier lifestyles to pay less for health insurance.
- Customer Experience & Coverage Personalization
AI will enable a seamless automated buying experience, using voicebots & chatbots that can pull on customers’ geographic and social data for personalized interactions. Carriers will also allow users to customize coverage for specific items and events.
- Faster, Customized Claims Settlement
Online interfaces and virtual claims adjusters will make it more efficient to settle and pay claims following an accident, while simultaneously decreasing the likelihood of fraud. Customers will also be able to select whose premiums will be used to pay their claims (known as peer-to-peer (P2P) insurance).
Artificial Intelligence in Insurance
Artificial intelligence is likely to affect the entire landscape of insurance as we know it. Three Current AI Application Trends in Insurance
1. Behavioral Premium Pricing: IoT Sensors Move Insurance From Proxy To Source Data
IoT data is opening a slew of are three key ways that IoT data will enable personalized insurance pricing:
- Pay What You Risk: Telematic and wearable sensor data enables lower premiums for less risky behavior, including driving less and exercising more
- Bundle Policy and Loss Prevention Hardware: Smart home companies will offer policy discounts to users of sensorized loss prevention technology, enabling cross-selling of devices and insurance
- Verify and Settle Claims: IoT data markets will enable carriers’ faster access to verified risk management information, rather than relying on costly assessments and audits
2. Customer Experience & Coverage Personalization: AI Interfaces Allow Better Customer Onboarding
Here are the three key ways that AI will enhance the insurance buying experience:
- Voicebots & Chatbots Will Recognize You: Advanced image recognition and social data can be used to personalize sales conversation
- Platforms Will Verify Your Identity: Automated personal identity verification can speed authentication necessary for quoting and binding
- Carriers Can Customize Your Coverage: Machine learning can allow fully online
3. Faster, Customized Claims Settlement: AI Settles Claims Faster While Decreasing Fraud
Speed and success in settling claims is a critical factor for insurance business efficiencies. Here are two key ways that AI will improve customer satisfaction after filing a claim:
- Speed in Settling Claims: This time-to-settle metric will end up being important for which business lines customers prefer using.
- Decrease Likelihood of Fraud: This decreasing-fraud metric will end up being important for which solutions insurance companies prefer using.
Artificial Intelligence in Insurance
AI Applications Transforming the Insurance Industry
Fraud Detection & Credit Analysis
The General Insurance Association estimates that around one in five claims the industry receives are either false or inflated. To combat fraud, insurers are using AI-driven predictive analytics software to process thousands of claims each month. By analyzing the claims in milliseconds based on set rules and indicators, AI is able to identify which may not be legitimate, reducing the number of fraudulent claims slipping through. These indicators include things such as frequency of claims, past behavior and credit score.
Customer Profiling & Segmentation
By automating and applying cognitive learning to their data collection processes, forward-thinking insurance companies are also advancing their customer profiling capabilities.
Equipped with the power to unify and derive insights from their internal and external customer data, insurers are able to build a more comprehensive picture of their customers, such as their insurance needs, interests and life stages, for more effective targeting. Insurers can segment their audience based on these attributes, and use deep learning to predict the conversion rate of these segments. With such insight, insurers can then decide the relevant product recommendations for each customer segment.
Insurance companies are also enhancing customer profiling with AI-enabled voice and facial recognition, which helps create biological customer profiles for fast and accurate verification, as well as the tracking of behaviors and attributes.
Product & Policy Design
Another area insurance companies are using AI is to inform their product and policy design.
By streamlining and speeding up the collection and analysis of massive data from owned channels, third-party sources and agents, insurers can use machine learning to discover customer trends and interests in real time. These insights are then being used to develop and improve product and policy design.
Underwriting & Claims Assessment
The process of underwriting is often viewed as an art based on personal judgment, but AI technologies have also worked their way into this area of insurance, making the process increasingly scientific.
Insurers are now using advanced analytics and machine learning, as well as additional sources such as satellites and the Internet of Things devices, to help get a more holistic view of risk, as well as to determine which submissions to review in the first place.