In its earliest days, artificial intelligence (AI) was thought of as a dead-end technology, an invention that would never be adopted or used to its highest potential. That couldn’t be farther from the truth.
Today, AI technologies are rapidly reshaping the way businesses operate across industries. In ours, AI in insurance is helping P&C insurers keep up with customer demands, operating requirements, and competitors.
But how exactly do AI and insurance work together?
Artificial Intelligence (AI) in Insurance
To understand how insurers can best utilize the capabilities of AI, you must first look at the expectations of a modern consumer. Everything today must be fast, but it must also be authentically personal. Personalized experiences are the new status quo, but delivering them at current market prices would be next to impossible without AI.
With AI in the insurance industry, insurers can create unique experiences for customers looking to buy or renew property and casualty insurance. Everything from claims to underwriting to data analysis can be impacted, streamlined, and optimized to improve customer service and internal operations.
A report from PwC forecasted that AI’s initial impact will primarily relate to improving efficiencies and automating existing customer-facing underwriting and claims processes. Over time, its impact will be more far-reaching; it can identify, assess, and underwrite emerging risks and identify new revenue sources, impacting nearly every aspect of the P&C insurance industry.
How to Maximize the Impact of AI on Insurance Operations
1. Leverage AI to Standardize Underwriting & Risk Assessment
The underwriting process depends on data management and analysis, a process traditionally overseen by people. With the advent of AI, the analysis of underwriting criteria can be processed faster, generating accurate pricing results and risk assessments. And with an open platform that uses predictive intelligence to improve risk selection and pricing, carriers can deliver customer experiences that are fast, easy, and intuitive.
This is not to say that the human element is entirely removed from the underwriting process – just the opposite. Reports created with AI can inform underwriters and their decision-making processes, making their jobs easier and their analyses more accurate. AI in insurance impacts many areas of the underwriting process, but most importantly, pricing.
AI can help underwriters look at current and past risk levels and pricing guidelines that correlate. Using historical data, AI can generate risk management steps and then monitor policies and insureds during the time of coverage. This can improve claims costs and relationships with customers, and ultimately helps P&C insurers more accurately price policies within an appropriate window, without “leaving money on the table.”
2. Reimagine what Claims Do
Claims have historically been a drawn-out process. And when a customer is forced to file a claim due to injury or property damage, the last thing they want to do is deal with multiple points of contact.
This is where AI can help. It can enable insurers to better serve their customers in their times of need. Claims processing software powered by AI can process claims, assign an agent, assess coverage levels, create follow-up tasks, and stay in contact with the customer throughout the claims process. This reduces cycle times and gets customers the help they need quickly, improving their relationships with their insurers and their insurers’ reputations in the market.
AI is also being used to combat a huge money pit in insurance – fraudulent claims. Intelligent systems can spot irregularities or patterns in data and alert insurers to possible fraud.
3. Use Data-Driven Personalization to Develop New Business
Artificial intelligence in insurance is vital for new business, as it is helping insurers provide a personalized experience to customers without any initial human interaction. Using client-generated data and AI algorithms, insurers can offer best-fit policies to prospective customers based on their unique requirements.
AI can even recommend coverage levels based on previous customer interactions or buying behaviors of customers who fit similar profiles. The burden of identifying the optimal product is no longer solely on an agent, and is instead heavily supported by massive amounts of data that could only be processed using artificial intelligence.
4. Innovate the Customer Experience with Data
AI can also help insurers prevent attrition or lapses with their current customers. These efforts all start and end with data – on customers, their behaviors, and their risk for letting their policies lapse.
AI can process data that insurers have collected as well as data outside of their systems. Social media information, demographics, purchase history, environmental factors, and more can all paint a picture about a customer. Algorithms can use this data to identify customers in need of attention and enable you to focus your re-engagement campaigns on that customer set.
Then, using AI, you can launch a re-engagement campaign that contacts customers through their channel(s) of choice and when they’d be most receptive to contact. AI engagement for customers can be optimized and used to select proper channels, appropriate products, targeting, and timing of messaging to be most effective.
5. Turn Customer Insights into Meaningful Marketing
To stay competitive in the insurance industry, insurers have to develop new products frequently. However, that effort is all for nothing if the products don’t sell, making marketing efforts vital to success. Similar to retention efforts, AI can also inform marketing efforts to target customers most effectively.
AI data can be used to develop profiles for customer groups, which marketers can then use to inform and direct their strategies. AI can also monitor leads as they work their way through the sales funnel – from awareness to interest to decision to action – and direct targeted marketing efforts to these potential customers at each stage in the process.
6. Transform While you Perform
AI in insurance can improve all facets of policy administration, underwriting, billing, and customer relations, but it should also be used to improve the internal operations of insurers themselves.
AI makes insurers more efficient. Customers can be contacted and serviced at a higher volume and higher speed, saving insurers money and creating happier customers. It can also speed up claims processing by automating decision-making processes and getting customers the money they need.
7. Reinvent Workers’ Compensation with SaaS Solutions
With SaaS-based workers’ compensation insurance software, carriers can more easily leverage both machine learning and AI to assess risk in real time and ultimately make more accurate and efficient decisions. This enhanced insight also allows insurers to provide more customer-friendly product options, such as pay-as-you-go pricing.
With a better worker’s compensation insurance program comes the data, compliance, and medical reports that organizations need to take care of customers while still providing the flexibility required for today’s operations. And, these solutions have the AI and data capabilities to scale up as demand requires.
Artificial Intelligence & Insurance Carriers: What’s Next?
With this information in hand, you should conduct an internal assessment of these functions, and decide where adding AI would have the most impact on your insurance operations. Once obvious improvement areas are identified, the next, and arguably most crucial step, is finding a partner to help you get started.
During this search, there are some best practices that will help ensure a more seamless transition:
- Seek out insurtech vendors in your platform provider’s ecosystem that offer value-added AI solutions
- Get demonstrations of the AI in action to decide if it is right for your operations
- Consider only starting with the areas where adding AI capabilities will deliver the most impact in the shortest timeframe
- This can be a more effective approach than attempting to make a wholesale shift and allows you to reinvest the savings and revenue from your first AI implementation into the secondary upgrade.
Artificial Intelligence & Customer Experience
All of the aforementioned areas of the insurance industry that can be improved by AI – underwriting, claims, new business, retention, marketing, and operational efficiencies – are aimed at improving the experience for customers. At the end of the day, customer satisfaction is the primary value-add of AI in insurance.
Customers expect to be a priority before, during, and after the sales process, a level of attention that would exhaust nearly every resource for insurers. With AI in insurance customer service, companies can attend to every need of their customers at the speed and frequency that is required.
To be successful, AI depends on one resource – arguably the most important resource for P&C insurers – data. And for insurers to successfully utilize the power of AI, they need a data analytics solution that can collect, analyze, manage, and report on the data they’re collecting every second. Once a proper solution is in place, AI software can be put to work, automatically leveraging data to help insurers make the best decisions for their businesses.
