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How to Leverage AI in Insurance for Better Business Outcomes

Artificial intelligence (AI), automation, and machine learning (ML) are emerging technologies that enable today’s organizations to save on time and costs, improve customer experiences, and increase operational efficiency. As the pressure to adapt and compete in the digital era continues to mount, organizations across industries are more readily embracing and tapping into the potential of AI, automation, and ML to optimize operations, products, and services.

In the insurance industry, automation in particular has the capacity to drive massive gains, as manual tasks are still common. Moreover, both businesses and consumers generate more data than ever before—insurers can leverage AI and ML to refine risk profiles, increase their ability to make predictions, and drive better pricing decisions. In fact, Juniper Research found that auto, life, property, and health insurers can increase annual savings by more than four times in 2023 compared to 2019, simply by investing in these emerging technologies.

But which parts of the insurance value chain should AI, automation and ML be applied to in order to maximize benefits? Based on what we see in the industry and our experience working with insurance clients, strategic areas of adoption include: claims processing, customer service, underwriting, and sales and marketing.

AI in Insurance: Use Cases

Improving Claims Processing with Automation

Claims processing involves several tasks, including investigation, review, adjustment, and decision. At many insurance companies, this process is largely undertaken manually, which is time-consuming and prone to human error. On top of this, the claims process is often complicated by inconsistencies in the way customers send in data. Leveraging automation for insurance claims can streamline the claims process and make it more logical.

As an example, automation and AI can be utilized to detect inconsistent claims and route them to a review process. Similarly, the technology can also be used to determine a more logical process for users based on the apparent inconsistencies.

Although only a few of the potential applications and benefits of AI and automation have been covered, these technologies can bring a litany of other benefits, including accelerated closure times for claims; increased customer satisfaction; better customer engagement; and increased productivity and job satisfaction for claims adjusters.

Optimizing the Customer Service Experience

Today’s customers seek seamless, convenient experiences, including when it comes to the services provided by their insurers. By effectively leveraging AI, insurance companies can improve how, when, and where customers can access the services they want, whenever they want them.

As an example, Liberty Mutual leveraged AI in their API portal project to enhance customer service, and thus the overall customer experience. Their API portal, which was released back in 2017, combines insurance data and public data to create better insurance products and services for customers. Perhaps the most impressive product that came out of Liberty Mutual’s project was a self-service mobile app which allows drivers involved in an accident to assess damage to their car in real-time using their smartphone.

By using AI and ML, Liberty Mutual’s app can assess the level of damage and estimate repair costs by comparing the real-time image to thousands of images of other car accidents. This information is delivered to drivers’ smartphones in real-time, making a high stress experience a little more frictionless, informed, and transparent.

Streamlining Document Processing for Underwriters

Automation and AI can also be applied to improve the experience of internal employees, particularly when it comes to underwriting—a process that involves a high volume of documents. Underwriting can be incredibly resource-intensive when done manually, which is often the case at many insurance companies.

This process can be dramatically accelerated using document capture technologies, which allow insurers to automatically extract the relevant data they need from all documents involved in the application process. As a result, the underwriting process becomes lean and efficient, freeing up time for underwriters to focus on evaluating risk and improving retention rates.

Personalizing Communications, Sales, and Marketing

The power of AI in insurance can be applied to sales and marketing to personalize customer communications and experience. With regards to sales, insurers can use AI to analyze historical claims data, biometric data from IoT, data from third-party data sources, and market data to provide optimal quotes. Today, a number of insurers now offer automated quoting by leveraging AI in this way.

Given that a key aspect of effective marketing is knowing who to target and when, insurers can utilize emerging technology to organize customers into different segments based on factors like purchasing behavior, demographics, location, and even occupation and marital status. Machine learning can spot patterns and insights that are often missed to create more targeted segments. Accordingly, insurers can further tailor products and services to each segment and engage them with the right content in the right channel, thereby increasing the satisfaction of their customers.

One way that insurers are optimizing channels of communication is chatbots. Chatbots allow carriers to automatically answer quick queries and complete simple transactions (i.e., updating contact information and addresses) without any human intervention. They can also direct customers to the right places to get answers to their questions. In other words, chatbots provide a highly effective and convenient channel of communication for customers who want an answer right away, as well as for customers who don’t want to pick up the phone or write an email.

Adopt New Technology or Risk Being Left Behind

Given the vast potential benefits emerging technologies provide, insurers looking to remain relevant in the digital era should actively engage with big data and AI innovation, especially as it becomes more mainstream. Not only will this give forward-thinking companies a competitive edge, but it can also protect them from the repercussions of failing to engage sufficiently with new technology.

Across industries, it’s anticipated that the demand for AI and automation solutions will only increase in the years ahead. A recent study by MMC Ventures found that 93% of US and UK organizations think AI is a business priority. From improving operations, products, and services to enhancing customer experiences, there’s no doubt that AI, automation, and ML will become an imperative for insurers of all sizes looking to compete in the digital age.

Not sure where or how to get started with automation and AI in insurance? Check out our Digital and Cloud Services page to find out how your firm can get ahead in the race to digital.

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