How AI is empowering the insurance sector to transform itself

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The intelligent and well-informed utilisation of data, Artificial Intelligence (AI), and deep learning techniques are here to offer enormous growth opportunities to the insurance sector. These technologies are coming together to create ‘insurance as a product that is not only easy to use, and accurate but is also personalised, refined, and reduces overhead costs.

AI and automated data science machine learning platforms enable insurers to become more equitable and more customer-centric, with a fair assessment of every individual based on their unique health conditions and risks. These technologies are at the forefront to resolve several challenges fraught in the insurance sector across the country and globally as well.

Large volumes and severity of insurance claims cause longer claim settlement times. On the other hand, disintegrated, manual operations hinder efficient claim investigations and increase claim settlement costs and loss ratios. These challenges withhold insurance companies from increasing their margins and market shares. AI in insurance addresses these concerns by assisting data teams in simplifying data collection, automating key processes, and therefore, optimising business decisions and marketing spending. This empowers insurance companies to identify profitable customer segments and offer seamless and exceptional customer service at all times, thereby growing their revenues.

Digitising insurance end-to-end, for greater personalisation and profitability

By engaging advanced AI, Machine Learning (ML) models, insurance carriers can ensure improved predictive accuracy of individual consumer behaviour and historic trends. This drives an accelerated understanding of customer segments and provides carriers with a deeper insight into insurance claim patterns in real time.

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Leveraging accurate AI technologies, especially for ‘high payout – lower premium’ products like life insurance, enables companies to carefully screen and classify prospective applicants who they can insure, conduct precise risk assessments and deliver risk-based pricing recommendations with ease, for every individual.

This ensures that end-to-end insurance processes are more flexible and go beyond conventional, rules-based policies, ultimately leading to higher conversions, better underwriting, and efficient claims management. Globally, companies are already using AI-driven chatbots for customer onboarding and engagement processes, along with automated claims resolution with minimised need for human involvement from start to end. These automated chatbot interactions with customers across platforms, generate a rich database of customer insights, enabling analysts to continuously review and improve future customer experiences.

Enhanced decision-making and customer experience at every stage

Modern AI and ML tools equip insurers to take prompt and action-driven decisions that mitigate loss due to fraud and policy lapse risks. By assisting renewals teams to supervise potential policy lapsations and their causes, which are otherwise very difficult to identify, these tools offer a mechanism to prevent lapsations at individual customer levels. In this way, AI-driven intelligence enables analysts to strategise toward providing superior customer services where they are most required. Data-driven decision-making also leads to a reduction in false positive rates and overall loss ratio, and an improvement in time to deployment.

Insurance processes that are backed by AI also lead to more effective targeting of customers based on demographics, psychographics, health records, etc. Furthermore, it ensures that the targeted customer audience can access custom quotes, policy details, and payment assistance almost instantly. These automated provisions significantly improve the retention of policyholders, and promote loyalty and customer acquisition, while reducing customer churn rates. With reduced administrative costs and improved customer experiences, revenue leakages can be controlled effectively and at early stages.

Behavioural economics facilitated by AI creates an opportunity for early intervention in claims handling as well, and this in turn accelerates the claim investigation and minimises overall turnaround time from assessment to settlement. Over time, improved claim outcomes generate higher confidence in the accuracy of claim approval decisions and straight-through claim processing abilities. Claims executives can optimise resources, and forecast claim volumes and severities in an improved and productive manner.

Tapping on the rise of digital-first insurance companies with AI and data intelligence

AI-based solutions successfully maximise the growth and scalability of insurance companies by delivering enhanced personalisation, data-driven cross-selling and up-selling suggestions, and improved marketing strategies. The power of AI and Big Data makes it possible to implement early prediction and prevention measures, adding critical value to an insurance lifecycle, across both non-bank and banking insurance companies. By providing ample time for investigation and effective risk management, AI-driven tools identify claim abuse and fraud scenarios in time, thereby nurturing an effective insurance ecosystem across all touch points including policyholders, advisors, and carriers.

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In a competitive insurance industry like today’s, it is important for insurers to adopt technology-powered processes, and loss-controlling tools with risk-specific pricing models and also to identify early indicators of policy lapse risks. AI and ML technologies seamlessly fulfill these requirements and offer the opportunity for insurance as an industry to become fairer, faster and more affordable across customer segments. Insurance companies that embrace an innovative, AI-driven mindset that can effectively predict and deter, will thrive and succeed in the future of the insurance industry.

Views expressed by: Suman Singh, CEO, and Founder, CyborgIntell