What exactly AI is?
Artificial intelligence (AI) has become one of the biggest buzzwords of the digital age. If you are not familiar with AI, it is essentially the concept that a computer can think, learn and behave like a human. AI can interpret data and use the learnings to perform a variety of tasks. Machine learning is the specific application of AI that allows it to interpret and analyze the data in a productive way.
While AI may sound like a futuristic concept, many of its use cases are already ingrained in our everyday lives. For example, whenever one of your favorite streaming services, like Hulu or Netflix, recommends a great new show for you to binge-watch based on your preferences, that is AI at work. AI is also being used in a number of industries, including healthcare, education, financial services, eCommerce and human resources. Generally speaking, most companies that use AI do so to make their business processes more efficient and to solve problems faster.
The Need for AI in Insurance
Insurance is an old and highly regulated industry. Perhaps because of this, insurance companies have been slower to embrace technological change compared to other industries. Insurance is still steeped in manual, paper-based processes that are slow and require human intervention. Even today, customers are faced with time-consuming paperwork and bureaucracy when getting a claim reimbursed or signing up for a new insurance policy.
McKinsey gauges a possible yearly worth of up to $1.1 trillion if AI tech is completely applied to the Insurance business. Of this, the business regions that can benefit the most are:
Deals and advertising: AI can be utilized to value protection strategies all the more seriously and pertinently and prescribe helpful items to clients. Safety net providers can value items dependent on individual requirements and way of life with the goal that clients just compensation for the inclusion they need. This builds the allure of protection to a more extensive scope of clients, some of whom may then buy protection interestingly.
Hazard: Neural organizations can be utilized to perceive misrepresentation designs and lessen false cases. As indicated by the FBI, non-health care coverage extortion in the US is assessed at more than $40 billion every year, which can cost families between $400–700 every year in extra expenses. AI can likewise be utilized to further develop insurance agencies’ dangers and actuarial models, which might possibly prompt more beneficial items.
Activities: Chatbots utilizing neural organizations can be created to comprehend and answer the heft of client questions over email, visit and calls. This can save critical time and assets for safety net providers, which they can convey towards more beneficial exercises.
Why does the future still feel so distant?
Because AI is still a relatively new technology, there is some uncertainty around its ability to improve the experience for insurance companies and their customers. AI is not a perfect system by any means — it has flaws that computer scientists are still working out. These are some of the major consequences that AI could have on the insurance industry.
Wellness pricing: As we mentioned earlier, AI can capture data about behavioral habits. It is possible that insurance companies could use that data to set discriminatory rates. For instance, a health insurance company could take someone’s weight and exercise data from their fitness tracker and give them a price based on their assumed health risks.
Job loss: Many insurance companies are interested in using AI as a way to reduce the money they spend on staffing. But many customers still want to talk to a live agent when filing a claim or handling other important issues. If the insurance industry moved to an AI-based workforce, that might eliminate millions of jobs from the economy.
Privacy issues: It is no secret that your personal data is likely available somewhere within the cloud, whether companies are using it or not. However, many people are not comfortable with companies having increased access to their data, even if it is used to provide more personalized experiences.
Despite these potential issues, nearly 80% of insurance executives think that AI will transform the way insurance companies collect information and interact with their customers. According to McKinsey, a global management consultant firm, AI implementations could increase productivity in insurance processes and reduce operational expenses by up to 40% by 2030. However, more research needs to be done to determine if insurance customers are keen on the arrival of AI.
AI is poised to disrupt the insurance industry like never before for both insurers and their customers. Customers may enjoy a more seamless user experience and more affordable rates. Insurance companies might save money by making their processes more efficient or offering AI car insurance policies. With AI, the possibilities are boundless, and it is only a matter of time before we start seeing these improvements.