The insurance industry has been going through a major transformation over the last several years with customer expectations rising, legacy systems being put in place and an overall increase in operation costs. On top of this, AI is now at a point where it is changing how we all work and conduct business, as it continues to learn and develop as time passes.
AI can boost efficiency through advanced analytics and predictive modelling, as well as adding a form of automation to your work. It now has the power to facilitate proactive fraud detection, individualised service and more precise workings. This can impact several aspects of an insurance business, such as pricing and costs of claims.
In this article, we will explore the power that AI has in the insurance industry, how it can enhance the customer’s experience and how it will develop further in the future.
Insurance AI
AI has experienced rapid growth in advancement in recent years and has been able to reshape the insurance industry. It uses tools such as machine learning, natural language processing and image recognition to support the capabilities of insurers and help them further support their clients.
Machine learning
Insurers can be empowered by machine learning in AI as it can strengthen the accuracy of risk assessment. It also enables insurers to take a proactive approach, by predicting customer requirements and delivering tailored suggestions.
Natural language processing
Chatbots and virtual assistants boost service efficiency by swiftly addressing inquiries. Natural language processing further streamlines operations by quickly processing the unstructured data found in policy documents and emails, speeding up underwriting.
Image recognition
Employing image recognition technology accelerates claim assessments by analysing visual data captured at accident sites and property inspections.
How AI enhances customer experience
Using AI to enhance the customer experience is a strong option in this digital age. It can make interactions smoother and more efficient through proactive engagement, continuous support, faster resolutions, personalised interactions and a streamlined process.
AI also allows for predictive maintenance, which means that AI can analyse data to predict potential equipment failures before they occur. Therefore, there is minimal downtime and increased customer satisfaction. This will help build a strong relationship between the insurer and the client, as they can trust that there will be consistent attention paid to them.
Disadvantages of AI in insurance
While there are clear advantages to using AI in the insurance industry, it’s important to outline the disadvantages that come with it. There are several disadvantages, such as bias, job displacement, privacy concerns and over-reliance on technology.
- Bias – AI is taught by feeding it data, so if this data is biased it can lead to discrimination against certain groups of people in extreme cases.
- Job displacement – With the increase of AI usage in the insurance industry, it is likely that it will eventually lead to job losses. Insurance companies should put procedures in place to prevent this.
- Privacy concerns – Customer data is needed for AI to function correctly in the insurance industry. This can lead to concerns regarding customer privacy and security.
- Over-reliance on technology – There is no denying that AI is a powerful tool. However, experienced insurers should still use their expertise to offer a more personalised service.
The future of insurance AI
There’s no shying away from the fact that AI will continue to be used in the insurance industry, as it’s a new way to offer a better customer experience. Insurers must use these technologies transparently to further develop better services and remain competitive in the digital era.
Insurance companies can consider using AI in other ways to further expand their leverage within the industry, such as hyper-personalisation, micro-insurance, better conversational AI and implementing ethical considerations.
