Artificial intelligence is changing the way we live. It has led to some amazing advancements in various industries and professions, allowing machines and software to take action and solve problems. 

Artificial intelligence (AI) refers to systems or machines that mimic human intelligence to perform tasks and have the ability to iteratively improve the information they collect. Artificial intelligence manifests itself in various ways and can make sense of data on a scale that no human could ever.

In the insurance market, AI is expected to continue revolutionizing processes.  With the new wave of deep learning techniques, such as convolutional neural networks, artificial intelligence (AI) has the potential to live up to its promise of mimicking the perception, reasoning, learning, and problem solving of the human mind. This implies the change of the current state of “detect and repair” to “predict and prevent,” transforming every aspect of the industry in the process. Additionally, the pace of change will accelerate as brokers, consumers, financial intermediaries, insurers, and suppliers become more proficient in utilizing progressive innovations to improve decision-making and efficiency, lower costs, claim handling and fraud detection (Mckinsey, 2021)

Principal points of change

Efficiency: the processes in the insurance sector will be more automated and options that will allow changing / improving the interaction between clients and insurance companies will also arise. In terms of efficiency, streamline meeting with the client will be an important point of focus. Among some tools/benefits that Ai will enable are the following:

Rapid Document Digitization with OCR: OCR stands for optical character recognition — a tech-enabled process of recognizing hand-written digits and texts. Instead of manually re-typing information, insurance agents can be empowered with automated systems, accurately capturing and reconciling data from paper-based forms, and augmenting it with inputs from other sources.

Distribution of policies: Auto and home carriers have enabled instant quotes for some time but will continue to refine their ability to issue policies immediately to a wider range of customers as telematics and in-home Internet of Things (IoT) along with AI devices proliferate and pricing algorithms mature.

Lower Costs: With AI, insurance companies can price their policies more competitively and customize them for each customer. Artificial intelligence could obtain detailed information from a person and based on this establish the premiums according to the criteria that define it. In the healthcare industry for instance, many hospitals are using AI to offer personalized treatment plans and predict the likelihood of patient readmissions.

Claim Handling: When referring to claims processing, we refer to the entire process of managing policyholder claims; it covers all stages of claims from initial contact to the closing of the case. AI is able to find meaning in big datasets. In claims processing, this abundance of data means that claims can be assessed more accurately than ever before

Fraud Detection: AI can help insurance companies detect claims data anomalies and identify false information that customers use to obtain a lower premium or higher claims payment. It's important to note that currently in the United States, fraudulent claims cost $40 billion annually while in the UK 350 cases of insurance fraud are uncovered every day. 

Among some examples of the use of Artificial intelligence in the Insurtech industry we can find the following companies:

  • Poleecy uses AI to offer you the micro policy that best suits your needs in just minutes. These policies are targeted to the immediate needs and payments are quick with no paperwork needed.
  • Akur8 developed an AI-based insurance pricing solution that automates modeling for non-life insurance companies while keeping full transparency and control over the models created, as required by regulators worldwide.
  • Infermedica helps insurance, healthcare and pharmaceutical companies increase efficiency, improve patient flow, and reduce costs thanks to the use of AI by providing companies with a set of advanced preliminary diagnosis and triage tools.
  • Omni:us provides artificial intelligence for cognitive claims handling, extracting insights from unstructured data so manual, paper-based claims processes can be automated.
  • Shift Technology uses Ai to help insurance companies avoid fraud and automate claims. They address several critical processes throughout the insurance policy life cycle, helping insurers achieve faster and more accurate claims and policy resolutions. They detect potential insurance claim fraud with a 75% hit rate.

Thanks to AI, customers will be able to enjoy a more efficient user experience with more affordable rates and insurers will have more options to optimize their processes and be more efficient. AI is going to revolutionize the insurance industry, and this added to the use of both machine learning and deep learning even more, the revolution will be like never before, both for insurers and their clients. 


Sources:

https://www.mckinsey.com/industries/financial-services/our-insights/insurance-2030-the-impact-of-ai-on-the-future-of-insurance