Insuring the future: Impact of AI on the insurance industry
Artificial intelligence (AI) has allowed machines and humans to collaborate - making many tasks faster and more efficient - while freeing up humans for the critical thinking only they can do. Over the years, as AI technologies evolved, many industries have embraced AI solutions to achieve transformative outcomes and get a competitive edge.
The finance industry and insurance companies have been reluctant to embrace digital technologies. But the business disruptions, rise in medical emergencies, the death toll of the pandemic, and the resultant increase in call volume convinced insurance companies to embrace digital transformation and invest in AI solutions. The impact of AI has become evident over the last two years, solidifying the place of AI in insurance.
Impact of AI on the insurance industry
Various underlying AI-related technologies and AI solutions, like machine learning, data modelling, and predictive analytics, have revolutionised the insurance value chain. As a result, insurers can engage with customers faster, support quick distribution and claim settlement, and be more efficient in fraud detection and prevention. This has positively impacted the company’s bottom line and customer satisfaction for insurance companies. But this is only scratching the surface when it comes to understanding the impact of AI in the insurance industry.
Contemporary insurance BPO trends and AI solutions have the power to revolutionise how insurance companies distribute, and customers experience insurance products. Below are the six points that highlight the true impact of AI in the newly digitally-oriented insurance industry:
Faster and personalised user experience
Faster claim processing
Effective fraud detection and prevention
Integrating wellness and insurance
Building trust with policyholders
Until recently, insurance products were generalised packages, not factoring in the individual profiles, risk behaviours, and specific needs of the customers. AI, however, has been instrumental in introducing more usage-based insurance products that instantly create a risk profile for the customer – from real-time customer data, calculate appropriate premiums, and personalise the insurance products. With access to real-time data, this personalisation happens much faster for an overall enhanced customer experience.
Manual claim processing has always been a pain point for insurance customers because of the formalities and time commitment necessary. This has even resulted in people turning away from insurance products. For insurance companies, it is a revenue sink as manual claim processing takes time and resources away from the company. AI in insurance has reduced the claim processing time from several days to a few hours – or mere minutes in some cases – benefitting insurers and customers.
Data analysis is the foundation of underwriting, and AI is much faster and more efficient in processing vast amounts of data. This allows the human underwriter to focus more on strategic and portfolio management aspects of underwriting instead of pouring over huge datasets, making the overall process more efficient.
Fraud detection and prevention are two of the biggest concerns for insurance companies as identity theft, and cybercrimes are becoming more prevalent. As claim volumes increase, it is not viable for insurers to verify each claim using traditional methods. On the other hand, AI and machine learning algorithms can identify the gaps that fraudsters can exploit. They report any suspicious activity to the insurance company, fortifying their efforts for fraud detection and prevention.
Since an insurance company’s profits depend on limiting payouts, they have the incentive to prevent illness. Different AI tools allow insurance companies to focus on preventive care – through health apps and medical-grade sensors (IoT). As a result, AI is enabling insurers to bundle insurance policies with health platforms, offering personalised health guidance and insurance products to customers and helping people stay healthy.
One of the biggest impacts of AI in the insurance industry is the trust between an insurer and a policyholder. Previously shrouded in doubt, this relationship is becoming more trusting as AI is bringing transparency, speed, personalisation, and efficiency to the insurance industry. From AI chatbots answering every question a customer may have to claim processing in mere minutes, AI has fostered a trusting relationship between insurers and policyholders.
AI in insurance has comprehensive benefits, from enhanced customer experience to improved company bottom line. As the industry “stands on the verge of a seismic, tech-driven shift”, the impact of AI we observe now makes it clear that AI is future-proofing the insurance industry. This will allow the insurance industry to adapt to the rapidly changing world.
For organisations on the digital transformation journey, agility is key in responding to a rapidly changing technology and business landscape. Now more than ever, it is crucial to deliver and exceed organisational expectations with a robust digital mindset backed by innovation. Enabling businesses to sense, learn, respond, and evolve like living organisms will be imperative for business excellence. A comprehensive yet modular suite of services is doing precisely that. Equipping organisations with intuitive decision-making automatically at scale, actionable insights based on real-time solutions, anytime/anywhere experience, and in-depth data visibility across functions leading to hyper-productivity, Live Enterprise is building connected organisations that are innovating collaboratively for the future.
How can Infosys BPM help?
Infosys BPM insurance business process management services can help you navigate the future as InsurTech companies continue to leverage AI and conquer more ground. Leverage the constantly evolving AI technologies to reduce your opex and transform your business processes to meet and exceed customer expectations and market demands. With our service offerings, spanning a wide variety of businesses and insurance products, you can assess, anticipate, and leverage the impact of AI on the future of insurance to stay competitive.