AI in Insurance: How New Technologies are Changing the Game

AI and other emerging technologies have the potential to drastically alter the insurance sector in ways that we do not yet completely comprehend.

Ben Hartwig //May 15, 2023//

AI in Insurance: How New Technologies are Changing the Game

AI and other emerging technologies have the potential to drastically alter the insurance sector in ways that we do not yet completely comprehend.

Ben Hartwig //May 15, 2023//

Artificial intelligence application in the insurance sector is not necessarily a novel idea. Yet due to recent technological developments, many insurers now have the capability to more fully utilize AI in the insurance sectors to transform their business. 

Current state and use of AI/technology in insurance

For many years, insurers have used statistical models and data analytics to forecast and evaluate risk. These conventional data solutions for insurance providers do have certain drawbacks, though. They take a lot of time, they’re expensive and they’re prone to mistakes. Also, they frequently draw on previous data, which may not be a good indicator of what will happen in the future.

By enabling insurers to make data-driven choices in real-time, artificial intelligence and machine learning have the potential to revolutionize the insurance sector as well as several other industries. Massive volumes of data from many sources, such as social media, IoT devices and other unstructured data, may be analyzed by AI-powered systems.

As data is a core component of virtually every business in every industry, these effects will be unquestionably impactful. Specific to the world of insurance; underwriting, claims processing, fraud detection and customer service may all be made better with the use of such data tools.

READ: AI in Employment — A Troubling Issue in the Hiring Process

How new AI technologies will impact and change insurance?

The act of evaluating a potential policyholder’s risk and establishing the proper premium is known as underwriting. Conventional underwriting practices sometimes rely on insufficient or out-of-date data, which can result in erroneous risk evaluations and increased client rates. By examining a wider variety of data sources, such as social media, credit scores and driving behaviors, AI-powered underwriting can assist insurers in producing more accurate risk assessments. Moreover, AI has the potential to automate the underwriting procedure, speeding up the policy issuance process and enhancing client satisfaction.

Another area where AI can have a big influence is in claims processing. The typical claims processing methodology is frequently labor-intensive, error-prone and manual. By automatically checking claims, spotting possible fraud and sorting claims according to severity, AI-powered claims processing systems can speed up the process. This increase in the resolution of claims will surely increase client satisfaction.

For insurers, fraud is a major issue that costs them billions of dollars annually. The majority of the time, traditional fraud detection techniques are reactive and rely on post-incident investigation to determine fraud. Systems for detecting insurance fraud that are driven by AI may be proactive and analyze trends and anomalies in real-time to find probable fraud before it happens. By avoiding the payment of bogus claims, this can save insurers time and money.

READ: Combatting E-commerce Fraud: Best Practices for Fraud Prevention in Online Sales

In the insurance sector, AI may also enhance customer service and satisfaction. Customers may get immediate responses to their questions and concerns through chatbots, virtual assistants and other AI-powered solutions. Moreover, AI may assist insurers in tailoring their offerings to each client’s particular demands, increasing client satisfaction and loyalty.

Potential challenges

Although AI has the potential to completely transform the insurance sector, there are still a number of issues that insurers must deal with. Privacy and cybersecurity challenges are among the biggest difficulties. The proper and moral collection and use of consumer data is the responsibility of insurers.

Moreover, they need to safeguard client data from potential hacks and security holes. Potential effects on employment present yet another difficulty. Several jobs that are now carried out by human personnel might potentially be automated by AI-powered technologies. This may result in cost savings for insurers, but it might also cost people their jobs. Insurance companies need to find a method to combine AI’s advantages with any possible effects on employment.

READ: How to Minimize Cybersecurity Risks and Balance Customer Friction for your Online Business

The bottom line

As has been shown, artificial intelligence and other emerging technologies have the potential to drastically alter the insurance sector in ways that we do not yet completely comprehend. Although there are certain issues that need to be resolved, AI has a lot to offer customers and insurers. Insurance companies may improve the product suites, operations and customer service by utilizing AI and other cutting-edge technology. We can anticipate many more cutting-edge applications of AI as the insurance sector develops, which will certainly have a massive impact on the sector’s future.

 

Ben HartwigBen is a Web Operations Executive at InfoTracer who takes a wide view from the whole system. He authors guides on entire security posture, both physical and cyber.