Artificial Intelligence a game changer for insurance companies

18 Feb 2022 , 02:58 PM

Digitalization fueled by the current pandemic has given rise to the datafication of personal and professional interactions. Organizations are leveraging artificial intelligence (AI) to mimic human thinking patterns at a faster speed, derive insights from the vast available data, solve their complex business problems, and make smart decisions.

Many industries are trying to combine AI with their solutions to reap its benefits. Insurance is no different. Some insurers have also mentioned AI as the top ‘game-changing’ technology in the 2020 Gartner CIO survey.

How AI Is Making a Dent Across All Aspects of the Insurance Business

According to GlobalData’s emerging technology trends survey 2020, “56% of insurance executives believed AI would significantly improve operational efficiency over the next three years, with 47% stating that investment in AI would accelerate over the next year.” AI capabilities such as data analytics, text analytics, natural language processing, generation, pattern recognition, object detection, sentiment detection, recommendation engine, and automatic decision-making tools are making massive headways into all aspects of insurance– policy underwriting, servicing, and processing claims.

- Accelerating Accurate Policy Underwriting
An AI-enabled underwriting engine can automate the underwriting process. It analyzes the incoming application, identifies concerning areas, and ensures straight-through processing if all underwriting criteria are met. Failures are automatically sent for review.

Predictive analytics augments the decision-making process of adjudicators by providing a decision support system, which analyzes the historical and current policy data and helps make an accurate and informed decision on premiums. For instance, apart from personal information in health insurance, AI can help capture the customer’s lifestyle pattern related to their eating habits, sleeping patterns, work mode, and medicinal usage. An underwriter can determine the risk and decide the appropriate premium based on the information. As per Deloitte, “40% of the health insurance customers, 38% of home insurance customers, and 48% of motor insurance customers are willing to track their behavior and share this data with insurers for a more accurate premium.”
Insurance carriers can leverage satellite imagery data to assess the risk associated with property insurance by analyzing geo-specific data of a particular region and appropriately determining realistic risk exposure and associated premiums.

- Enabling Efficient and Faster Policy Servicing
According to PWC analysis, 2020, “46% of the organizations are augmenting their support functions by chatbots, and 44% are using AI to automate routine decision making and delegate it to algorithms for both front and back-office processes”.

Customer centricity is at the core of policy servicing, and numerous AI-enabled tools can significantly improve customer care services. For instance, chatbots can replace human agents by answering frequently asked queries based on stored data, and voice AI can swap the role of customer care executives. AI can also help with parallel processing and rule-based automatic case classification, reducing the turnaround time for policy processing and servicing. These AI-assisted tools ensure 24x7 availability, quick and best problem-solving capability, and less waiting time, increasing customer satisfaction tremendously. This frees up caseworkers from standard and routine activities and focus on more value-added services to the customers.

- Powering Intelligent Claims Processing
Intelligent platforms have several use cases in claims like intelligent document classification, pattern detection, claims process automation, satellite and drone-assisted imagery for claims, and fraud detection.

Managing huge document volume with agility can be achieved using AI-enabled document classification, which can quickly and automatically organize the information. AI-enabled low code and no-code platforms allow intelligent claims process automation to solve complex cases effectively. It routes cases basis the complexity and availability of caseworkers bringing about agility in the decision-making process.

Satellite and drone imagery data can help assess real-time damage during natural disasters without sending field agents to high-risk locations. In case of motor and property damage, bots can scan through pictures and videos using their image recognition capability and automate claim settlement.
In this digital era, cyber fraud has become common. AI enables easy and real-time fraud detection and claim rejection. According to Purplesec cyber security trend 2021, “cybercrime as a whole has increased by 600% since the beginning of the global pandemic.” And AI-assisted tools can analyze massive transactions, determine trends, and weed out fraudulent claims. AI-based optical character recognition algorithms can detect typography discrepancies.

Key Takeaways

AI is set to transform the way the insurance industry operates. It acts as an essential tool that infuses intelligence across the spectrum of the insurance business. It saves them time and money, reduces workloads, accelerates case processing, reduces turnaround time, infuses intelligence into decisions, and increases employee productivity. All of these result in higher customer satisfaction.
The time is now for insurance businesses to tap into the power of AI.  

The author of this article is Mr. Shantanu Tiwari, Head of Insurance Practice, Newgen Software

The views and opinions expressed are not of IIFL Securities, indiainfoline.com