Top 5 ROI-Positive Use Cases of AI in Insurance

OUTLINE

• • Quick Summary
  • AI in Insurance: An Overview
  • Use Case of AI in Insurance
  • Insurance Companies Using AI 
  • Challenges of Using AI in Insurance
  • Final Thoughts

QUICK SUMMARY

Artificial Intelligence (AI) is revolutionizing every discipline of the economy. Integration of AI has transformed the functioning of the companies to a great extent. Increased operational efficiency and enhanced customer satisfaction are core benefits of utilizing AI. The Insurance Industry is also facing a vortex of AI. This cyclical wind is all set to change the look of the Insurance Industry. Please read our blog to get detailed insights into the Use Cases of AI in Insurance. 

AI IN INSURANCE: AN OVERVIEW

The Insurance Industry is experiencing waves of revolution, especially with the usage of AI. AI's role ranges across the insurance value chain from product management, policy acquisition & servicing to claims management. 

The global market of AI in insurance is estimated to reach $45.74 billion by 2031, with a CAGR of 32.56%. AI could ease almost every function of the insurance sector.  

AI in the insurance industry leverages benefits for customers(insured) and companies(Insurers). Integration of AI in the insurance industry has resulted in decreased costs, enhanced efficiency, and improved customer experience. As per a study by Forbes, operational efficiency is enhanced by 60% by integrating AI in insurance. This blog lists the use cases of AI in Insurance, companies that are using AI in those areas, and the challenges an Insurer has to face while implementing all these use cases.  

USE CASES OF AI IN INSURANCE

In the Insurance Sector, AI's role is expanding rapidly. Take an example of the Usage of RPA, which has reduced repetitive tasks and allowed teams to focus on more complex functions. AI has transformed the way insurers work over the years.

Below, some of the prominent areas of Use Cases of  AI in Insurance are listed: 

Fraud Detection

Fraud is a significant problem in the Insurance Industry, and financial losses might be the outcome of such actions. AI in fraud detection extracts data from multiple sources, such as insurance claims, historical trends, and policyholder details. Rather than human oversight, Artificial Intelligence in fraud monitors transactions and all other data repositories using AI. As millions of claims in insurance flood annually, machine learning algorithms can flag unusual customer behavior, discrepancies in policy information, and irregular claim patterns. Immediate action can be taken once suspicious activities are captured. 

Claim Processing

As per predictions from McKinsey, claim processing will be one of the most significant among other insurance functions by 2030. AI allows real-time detection of insurance claims and effortless processing of all documents of different formats related to claims. Automated claim triaging enables prioritizing claim urgency, the severity of the damage, damage extent, etc. Data-based claim validation allows claimants' data on loss incidents to be equated with the terms of insurance. AI enables analytics-based suggestions on claim rejection and approval. AI also leverages the forecasting of overall Claim costs(by region, customer, period, etc).  

Underwriting 

Artificial Intelligence for insurance underwriting yields 50%+ enhancement in productivity of underwriters. Optimal insurance pricing and risk assessment are fundamental advantages leveraged by AI. The request-to-quote cycle has been speeded up with the automation processing of omnichannel applications. Underwriting leakages could be prevented with Intelligent application triaging. Case-by-case optimal insurance pricing with intelligent and accurate suggestions enhances profitability and reduces loss risks. AI for pricing in insurance enables machine learning algorithms, advanced analytics, and big data to diagnose risks and make appropriate premium determinations accurately. AI algorithms evaluate individual policyholder data to leverage pricing grounded on specific behavior and risk factors. It considers factors such as lifestyle choices(for health insurance), driving habits(for vehicle insurance), property characteristics, etc.   

Risk Management

AI allows insurers to analyze risk with accuracy by assessing vast amounts of data. These sources include not only structured data like historical claims, trends, history, etc., but also unstructured data like social media. AI-based predictive analysis tools & models estimate risks and losses. Once risk is detected, an insurer can take preventive steps.  

Property Inspection

Inconsistencies in basic information provided to underwriters are a core challenge faced by insurance companies. External finishes, building age, and other essential details often need to be identified, which can lead to confusion and errors. This information flows from business owners themselves, who sometimes fail to yield when an insurer needs them. Taking into account' Satellite, street, and aerial level imagery' with an AI engine simplifies commercial property inspections. The scope of AI is vast in this area. 

AI has several uses, such as churn prediction and retention, customer lifetime value calculation, product recommendation, and improved customer experience.

INSURANCE COMPANIES USING ARTIFICIAL INTELLIGENCE

Several Insurance Companies around the globe are already using AI technologies as we saw in the previous section of Use Cases of AI in Insurance. Some of the prominent real-world examples are listed below who have used AI in the above-mentioned areas & paved the way for growth and development. It's important to note that AI isn't exclusive to insurance.  Across various industries, companies have leveraged AI consulting to achieve significant benefits, streamlining operations, improving customer experiences, and gaining a competitive edge.  This widespread adoption highlights the transformative power of AI and the potential it holds for the insurance industry as well.

• Lemonade- Lemonade uses AI-backed chatbots in processes ranging from quote generation to claims processing.

• Snapsheet- Through damage assessment and virtual estimation, Snapsheet has allowed insurers to process claims quickly. 

• Aviva- This InsurTech analyzes vast amounts of data for risk assessment and underwriting. 

• Hutsenpiller Insurance- Optimized pricing strategies and enhanced customer services are the core areas where Hutsenpiller is implementing AI.

• Geico- This Insurance Giant utilizes AI in multiple segments ranging from predictive analysis for fraud detection and risk assessment to customized services to Insured. 

• AXA- AXA enhances customer experience by utilizing machine learning and natural language processing in claim processing and the development of personalized insurance products. 

• Ping An Insurance- It uses AI-backed medical diagnoses for health insurance. It also implements AI in predictive analysis for risk assessment & AI-powered chatbots tailored toward customer services.

CHALLENGES OF USING AI IN INSURANCE 

While implementing all these use cases, one faces several challenges as well. With innovation and advancements in the application of AI, it also invites inherent risks & challenges that need to be given attention and unique solutions. Below are some of the main problems which need to be addressed:  

• The inadequate information provided to decision-makers due to the generation of false or inaccurate data impacted underwriting, claim approval, and other final choices.

• When AI systems sometimes function as black boxes, the logic and patterns followed by AI for decision-making become challenging to understand.  

• Sometimes, AI needs a broader range of information and data coverage, which leads to a gap in data availability and decisions to be made.   

• Privacy concerns are a core challenge as companies have vast amounts of sensitive and confidential data. 

FINAL THOUGHTS

AI is revolutionizing the insurance industry, allowing insurers to bring automation to their processes. By choosing the leading AI development company as your trusted partner for the integration of AI in insurance functions, knock on the doors of innovation. Hire AI developers and turn a nightmare into a reality!