Trends In Insurance: Leading to a Streamlined Process
The use of algorithms has dominated the finance industry, while financial advisory has taken a new shape with the advent of robo-advisors
It is often said that movies are a reality. Well, at a time when we have driverless cars and “staffless” supermarkets, this is undoubtedly a truism. Concepts like Chat Bots, Machine Learning (ML) and Artificial Intelligence (AI) have long been considered as esoteric subjects, associated with dreams and visions about the distant future of humankind. However, solutions that leverage these emerging technologies have now become ubiquitous. The field of AI is continuously challenging the frontier of machine intelligence and is pervading many aspects of our daily lives. From chatting with “Siri” to driverless cars, these technologies are helping humans do their work and organisations to deliver their services, more efficiently and effectively.
No longer Sci-fi
Over the last decade, advancements in AI and ML have moved at an alarming speed and have seemingly made the leap from “sci-fi” concepts to everyday buzzwords. The use of algorithms has dominated the finance industry, while financial advisory has taken a new shape with the advent of robo-advisors. So far, the application of AI and ML in the insurance sector has been fairly rudimentary. However, it is changing the landscape of the industry and is paving the way for more enhanced digital solutions in the industry.
Current Trends in the Insurance Sector
Underwriting and Behavioural Premium Pricing
Data is considered as the “oil” of the 21st century and technologies like AI and ML can help organizations reap the benefits of data. An entire league of fintech companies have germinated solely on their ability to harness data and draw intelligence from it to create optimal solutions and service the customers better. This has been possible only because innovative technologies have now moved the analysis of data from proxy to source data. Historically, insurance underwriters have had to rely on a statistical analysis of historical data and on information provided on applications by customers, to assess the risks surrounding a potential client. Machine learning, specifically natural language understanding (NLU), enables insurers to pore through more abstract and objective sources of data to pull together information which can more adequately assess the insurance carrier's potential exposure. Additionally, telematics and wearable sensor data can enable insurers to price premiums as per the individual’s risk profile. For example, drivers who have exhibited a history of safe driving can pay less for auto insurance.
Chatbots and Customer Service
The 21st-century customer has come to expect highly customised services and no longer attaches a high premium to loyalty. In such a business environment, AI can be used to parse reams of data to recommend insurance products that are most relevant to a customer. Chatbots that work with messaging apps are already being used by the industry to resolve claims and answer simple questions. Chatbots can also recognise the customer based on image recognition and social data, which can help companies further personalise sales conversations.
Transaction and Claims Processing
Since the product that is being sold is insurance, customers would judge the efficacy of an insurer by its ability to provide insurance claim to the customer, when the need arises, i.e. when they experience the risk against which they have taken insurance. However, since the insurance industry is highly regulated and by its very nature treads on the side of caution, claim verification and processing can often have a long gestation period. Consequently, this is an area where a lot of innovative technologies are focused on. By leveraging AI and handling massive amounts of data in a short time, insurers can move claims through the system from the initial report to communicating with the customer, in a far more efficient manner. Things like online interfaces and virtual claims adjusters will make it more useful to settle and pay claims following an accident, while simultaneously decreasing the likelihood of fraud.
The benefits of technology are myriad and the onus to leverage upon the same lies in the hands of the organisations. Technology is considered to be a great enabler, and its judicious use can help organisations serve their customers better and improve profitability. Insurers can either choose to make digital an integral part of their business strategy or stagnate into obscurity. Change, just like winter, has come!