Historically, insurance and other financial-services companies have struggled to overcome blockers and embrace innovative technologies to improve their business. Tedious processes like getting a quote, a policy, and then making a claim require a lot of paperwork and intermediaries.
Fortunately, artificial Intelligence solutions and machine learning are here to help address long-standing issues in the insurance industry. Artificial Intelligence (AI) helps with partial and complete automation and transforms random data into decision-making information. From chatbots to auto-enrollment, AI is at the heart of every new insurance product out there.
Regulatory compliance requirements, the pace of digitalization, and new competitors make it vital for insurance companies to get onboard with the latest technologies like artificial intelligence and machine learning (ML) to make better decisions and stay relevant to the customers.
But how exactly is AI helping insurance companies to decide on the right products, serve their customers better and make smarter decisions?
We showcase scenarios where AI is currently being used in the insurance industry to make smarter decisions to make a difference.
Areas in Insurance Where AI Helps Make a Difference
1. Fraud Detection and Prevention
The FBI estimates that the cost of insurance fraud is more than $40 billion per year.
Insurance fraud has always been a huge problem as there are thousands of ways to cheat an insurance company. As a company that offers protection from unpredictable events and circumstances, you certainly want to make sure that your customers are telling the truth.
Artificial intelligence solutions can help insurance companies detect fraud and prevent it by spotting abnormalities in claims data and querying the alleged events of an accident while processing claims. For instance, machine learning can help with fraud identification by tapping into unstructured data – claims, notes, documents, and structured data like policy statements. This helps identify false information given by customers looking to get a lower premium or bigger claims pay-out.
2. Lead Management
Insurance companies use AI and machine learning to determine the best way to approach leads from various sources. For example, a company that sells flood insurance will have different leads from a company that sells life insurance. AI will consider the type of lead and the likelihood of conversion and then suggest action.
AI is also capable of valuable insights from data and assists insurers and salespeople in pointing out leads for further nurturing. It helps salespeople interact effectively with the buyers by giving personalized recommendations according to the purchase history of buyers. In some cases, AI will even decide and take action without human supervision.
3. Intelligent and Automated Claims Processing
Claims processing can be done faster with the help of AI. Document capture technologies can handle the sheer volume of documents required for claims processing tasks. This makes it easier for businesses to speed up the multiple stages of the claim process, including but not limited to review, investigation, adjustment, remittance, or denial.
Insurance companies spend a lot of money on claims personnel, and insurance prices are often marked up to account for case-solving. Using AI, an insurance company could reduce its hiring spend by automating many time-consuming claims management and payouts processes. The time needed for processing claims could reduce from several days to hours or even minutes. It would also allow insurers to provide more customized contracts based on their unique circumstances.
Augmented intelligence solutions such as a combination of Salesforce’s Financial Service Cloud and Wipro Holmes provide an avenue to achieve significant workflow improvements while demonstrating how to make AI an ally.
4. Pricing and Customer Retention
Artificial intelligence solutions help insurance companies personalize their policies and price them competitively. Enterprise AI platforms used in insurance can look up various data, determine risks and benefits, and use this information to recommend best offers to retain valuable customers.
For instance, a home insurance company can access a person’s geographical location, marital status, and the likelihood of filing a claim. All these will help with setting premiums based on the defining criteria.
5. Designing Better Insurance Products
Artificial intelligence solutions and machine learning help collect purposeful customer data, operations, and claims. This data is then processed with advanced analytics using machine learning to help companies create better insurance products.
When these products convert more customers to contracts without costly advertising and fewer chances of churning, it makes a big impact on the bottom line of insurance companies.
A customer-centric data collection process allows professionals to analyze similarities and lookalikes regarding campaign tracking in the sales funnel. By doing this, insurance companies can build classification models and predict future sales performance for new and upcoming products.
Other applications of artificial intelligence platforms in insurance include risk tolerance calculation and management, claims analysis, asset management, consistent customer investments, and insurance coverage optimization.
Artificial intelligence is poised to disrupt the insurance industry in unseen ways for insurers and customers. By using artificial intelligence solutions, insurance companies can predict risk, underwrite policies faster, and ensure correct payouts for the correct people. This results in increased customer satisfaction and affordable policy rates.