The insurance industry is data-dependent and always has been. The method of collecting and implementing data has changed over the decades. Now in the world of big data, insurance carriers have more access than ever to the information they need. However, big data can be quite a lot for an individual or even team to analyze and properly interpret, that is where we can gain enormous assistance from the world of artificial intelligence. Let’s explore just how this incredible innovation is already changing the industry and where it will be headed in the future.
The Basics of A.I.
As soon as one first hears the term artificial intelligence they usually dream up wild scenarios of machine takeovers and apocalyptic situations, and while fascinating, the real world of this technology is far from this exciting or dramatic. The pure definition, according to Merriam-Webster, is a branch of computer science that attempts to simulate intelligent behavior within a computer.
In the business world, artificial intelligence is being utilized to help businesses achieve their goals such as improving efficiency, accuracy and more.
Artificial Intelligence in the Insurance Industry
While the insurance industry, in general, has been a bit slower to embrace technological changes, many carriers have already started exploring the use of artificial intelligence in different aspects of their operations. In the past few years, we’ve seen a lot of focus on improving customer experience, reducing operational costs, and improving loss ratios.
Improving Underwriting Efficiency
The process of underwriting was traditionally a very lengthy process full of human labor. Information needed to be obtained and processed by both the customer and the insurance agent.
Artificial intelligence can be used in underwriting to increase the underwriter’s efficiency and overall accuracy. Some examples of where AI can be implemented are: underwriting recommendations and providing additional insights. Artificial intelligence can then automatically decide to reject a policy given its findings about the business; approve it if it meets the carrier’s appetite; or direct it to a human for manual underwriting in edge cases, when there’s low confidence or in other scenarios that the artificial intelligence wasn’t trained for. This allows the underwriting team to focus on more profitable policies that require their attention, instead of manually going over policies based on arbitrary queues or time/date stamps. Artificial intelligence can also provide any additional factors, insights, or data the underwriter is looking for outside of the submission/questionnaire. This frees the underwriter to focus on understanding the meaning of the factors and evaluating the risk.
The main problem many insurance agencies face is an inefficient system of internal controls. When claims are processed, they are frequently touched by several people along the way. Even when people are fully engaged in their work, mistakes will be made as humans can not perform rote tasks with 100% perfection endlessly the way computers can. Computers’ ability to be methodical without end can streamline this process quite a bit.
The insurance industry can be wracked with fraudulent claims, due mostly to scammers including inconsistent information and outright lies which, if worded professionally, could potentially slip by human monitoring of the claim. This is where computers can automate this process of claim assessment and be trained through artificial intelligence to spot these inconsistencies. This has the potential to save the industry over $40 billion dollars a year.
Improved Customer Experience
When someone is in an accident or an emergency, the last thing they need is to have a needlessly convoluted and stressful process to get the help they need. With the use of artificial intelligence, this kind of customer headache can be avoided due to computers’ incredible ability to solve problems and report information to users in a timely fashion. Another bit of assistance that computers can provide is the ability to utilize data collection in agencies’ marketing efforts. Big data can be collected and analyzed on potential customers who can then be sold just what services they need à la carte instead of guessing on what they may need based on limited information.
All this having been said it can be seen that artificial intelligence is poised to radically change the insurance industry over the coming decade and beyond. There is no more lucrative and exciting time to be working in this field.