How AI is Used in the Insurance Industry: The Top 5 Benefits
March 10, 2022
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Artificial intelligence (AI) technology has seen tremendous growth across all sectors. A PWC survey, conducted midway through 2021, found that 86% of more than 1,000 executives said that AI would be a “mainstream technology” at their company. More than half cited the Covid pandemic as the reason for the acceleration.
For insurance carriers, the greatest benefit of AI was that it helps create a more satisfying customer experience. Of those surveyed, 65% saw an improved customer experience with AI, and 31% expected to see improvements within two years. Insurance executives also reported improved decision-making, greater efficiency, cost savings, and more innovative products and services.
Artificial Intelligence (AI) technology can transform your insurance firm. In this article, you’ll learn:
AI is the broad application of machine learning models trained against historical data in which some behavior was closely measured. Those models can then extrapolate that data into predicted patterns. A specific subset, conversational AI, is a technology that combines natural language processing (NLP) and machine learning (ML) in the packaged form of software such as digital assistants and chatbots with responsive capabilities.
Insurance carriers use AI in several ways, from handling quotes and automating the FNOL process to claims processing and engaging with customers. AI can also be used to onboard agents and brokers and customer satisfaction surveys. These are just some of the uses.
In addition, you’ll find AI being used to learn from client information for property and life insurance companies, and auto insurers may incorporate AI in their usage-based insurance (UBI) data collection.
McKinsey & Company, in their Insurance 2030 report, predict that by 2030, AI will have a “seismic impact” on the insurance sector. They envision that data science and AI will be used for everything from underwriting and fraud detection to claims processing and customer service.
For insurance professionals, there are many benefits of using AI, from risk assessment, underwriting, and real-time pricing data, to speeding up the claims process and enhancing the customer experience. There are also benefits for the company, such as greater efficiency, cost savings, and employee retention.
The top five benefits of AI for insurance companies are:
Whether it’s to get a quote, file a claim, or submit information, communicating with an insurance company can be stressful for your customer. AI helps streamline these traditionally time-consuming processes into a fast and seamless experience.
By intelligently routing customer service requests, insurance staff can focus on high-value interactions for enhanced customer engagement while enjoying less stress and improved morale. For example, using AI during the sales process can improve the close rate by 41%.
An insurance claims process, when handled manually, can take weeks. The standard way involves multiple phone calls and emails to collect essential information, creating a backlog of unsettled claims. With AI-enabled smart bots, claims management can be completed in a fraction of the time. As a result, claimants can be reached more easily with fewer attempts, and this improves efficiency while creating a more satisfying process for customers.
By using AI in their day-to-day operations and automating previously manual tasks, insurance companies can realize tremendous cost savings. Juniper Research forecasts that AI use in claims management will lead to yearly cost savings in the insurance industry of $1.2 billion by 2023.
Traditional insurers spend a lot of time fielding phone calls and routing emails to the proper staff member or department. AI frees them to focus on more complex issues as well as more meaningful engagement with your customers.
