AI In The Insurance Industry: Opportunities, Challenges And Best Practices

Inmediate.io
Jul 1, 2019 · 4 min read
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With extreme efficiency and in an unprecedentedly short time scope, artificial intelligence (AI) is moving insurance towards the ultimate customer goal — convenience.

Getting a personalized insurance plan, requesting immediate assistance, and resolving claims within seconds. Sounds impossible, right? Well, now it’s not.

Now, there’s a clear consensus about the power of AI in insurance, and customers of insurance companies can now get the full package without ever leaving the comfort of their homes.

Approximately 75% of executives believe that it will either significantly alter or completely transform the whole industry in the upcoming years.

But while there is great potential, there are also reasons to be cautious.

A rushed, one-sided, or superficial implementation could avert the journey towards more data-driven and customer-focused service.

Powerful AI

This results in better customer service, with bots able to construct customer profiles in order to suggest the best product. Such an individualized approach, combined with speedy delivery, ensures a smooth onboarding process and comprehensive support throughout the customer life cycle. The contrast with manual methods is impressive: Underwriting solutions based on AI can save up to 97% of the overall time resources.

The speediness also pervades claim settlement. Without unnecessary bureaucracy, claims can be resolved within three seconds.

Fraud detection is also streamlined: AI can evaluate data from multiple resources such as facial recognition or devices connected through the Internet of Things. These could include personal health gadgets, tools assessing your vehicle state, and even drones, which would be deployed to review the situation both when signing a contract and post-loss.

Potential Setbacks

The first concern is data quality. AI assesses a variety of structured and unstructured data that includes historical claims, personal documents, transactions, investigative reports, GPS data, images, and others. But the system can only function properly if these are built on organized and exact datasets. This is particularly important considering that AI will itself develop by learning based on these large volumes of data.

While disruptive technologies bring new opportunities, they also introduce new threats. Insurers must therefore always keep privacy and legitimacy issues in mind — the second challenge in this area. They may need to redesign the existing security policy.

Also, as they may encounter aversion towards AI, they need to convince both staff and customers that the innovation isn’t an imposed tool utilized by the company to avoid responsibilities, but a solution that empowers supports, and guides better decision-making. This is still an industry-wide goal, as 60% of consumers have expressed fears about purchasing coverage via chatbot.

Third, insufficient infrastructure compatibility and the lack of resources may bring chaos into the implementation process. Companies without a comprehensive plan or clearly delegated responsibilities and goals are more likely to encounter glitches and ambiguities. Whether with hardware, software, systematization, or manpower, there’s a need for the capacity and will to develop and monitor the processes.

Best Practices

This requires a systematic approach to data that includes pre-processing, normalization, image processing and design of deep learning algorithms to a general framework for the AI system.

With privacy and legitimacy concerns, insurers have the task of managing expectations, while also building greater trust in AI. They need to implement robust security architecture and train staff. But fostering understanding goes a long way, too. Customers need to be reaffirmed that whether it’s pricing, customer care, security, personalization or settling claims, they are entitled to continuous support.

Building a powerful infrastructure is crucial, and implementing AI may require a different IT environment than the one in place. Insurers should make sure to conduct targeted investments to facilitate migration to new technology systems.

Likewise, they should implement a comprehensive gameplan. AI often fails due to the lack of clarity or implementation only for change’s sake — so instead, insurers should critically assess the process and make sure it always contributes to wide-scale organizational goals.

AI can only be driven to their full potential if companies fully understand both the challenges and benefits. While the process may be laborious and requires financial and time commitments, it can positively transform the way insurance services are delivered.

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Inmediate.io

Written by

Introducing Inmediate: a platform on which customers, distributors and insurers using smart contracts connect. https://inmediate.io

Zero Equals False

Zero Equals False delivers quality content to the Software community. For more quality content, head over to https://zeroequalsfalse.com

Inmediate.io

Written by

Introducing Inmediate: a platform on which customers, distributors and insurers using smart contracts connect. https://inmediate.io

Zero Equals False

Zero Equals False delivers quality content to the Software community. For more quality content, head over to https://zeroequalsfalse.com

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