Digital Services

The Benefits Of AI In The Insurance Trade

One major technology phenomenon that is spreading to just about all segments of the U.S. economy is artificial intelligence. There are some who look at its arrival, as the devil incarnate because it is believed it will devastate the human workforce causing an epidemic of unemployment never seen before. Others think that with a little change in our thinking, AI will help human employment become a collaborating venture that will be beneficial to all.

Whether you fear AI or embrace it, it is here to stay and should grow into a major element of our lives.

One industry that will surely benefit from the technology is the insurance trade. Many believe that its incorporation into the insurance business will lead to a plethora of benefits from better productivity and customer experience to efficient claims management and the reduction of fraud.’

How AI Could Revolutionize Insurance

Artificial intelligence is forcing a revolution is nearly every facet of our economy and it will be no less so for insurance. Benefits that will be enjoyed by its incorporation into insurance operations include:

• Better claims reporting
• Improved claims management and investigation
• Improving loss estimation
• Enhancing routine operations
• Better fraud detection and prevention
• Improving behavioral policy pricing
• Maximizing customer experience and coverage

Claims Reporting

The process of working out claims should be a much easier undertaking with AI with or without human influence. With AI, the claims department of an insurance company will be able to create reports, route, prioritize, and assign claims with or without human input. The process will work in a combination of digital assistance and speech recognition. These things will compile information on loss claims through the initial contact of a policyholder with the insurance company, thus assuring greater productivity and more efficient processing.

Chatbots, AI’s ability to interact with customers, will gather the information of a customer’s claim. This will allow a customer to report a claim from anywhere at anytime through a Smartphone or computer. The information the chatbots will gather and than disseminate the information to the appropriate human worker for processing.

Improved Claims Management And Investigation

The current activity of claims investigation is mired in a quicksand of labor-intensive effort. That’s because the investigation involves the scrutinizing of the claimant to assure that his or her claim is above board. This activity takes up a whole lot of time making the process difficult, especially due to the competitive nature of the insurance trade. Conclusions may be rushed and could be based on erroneous interpretations. Moreover, an insurance firm must have a pretty hefty staff of employees doing the investigations. This can be costly.

With artificial intelligence, claims can be done efficiently without the chance of human error. The technology creates the claim, authorizes and approves it and then tracks the payment and recovery. The whole process is streamlined, automated, and data-driven from beginning to end.

Improved Loss Estimation

Consider how AI can make processing a claim for an auto insurance company so much easier. Instead of relying on the eyes of a human to evaluate photos of a damaged automobile to determine the proper amount of money to pay for a claim, AI does the evaluation of the photographs via algorithms and image recognition systems. This allows insurance companies to predict or assess damage based on the photographs. An AI analysis can assess loss and advise what parts are needed for the repair, thus making the whole process more efficient.

Enhancing Routine Operations

With the use of chatbots that AI allows, human representatives can be spared the minutia of claim evaluation leaving them available for assignment to other pressing issues. In addition, the chatbots can cross-sell or upsell customers to other products or services offered by the insurance company based on a customer’s profile or history.

Better Fraud Detection And Prevention

According to the Federal Bureau of Investigation, insurance fraud losses in the U.S. are about $40 billion a year. AI offers the opportunity to discover patterns in historical data that assists in quick detection of fraud in individual cases and thus prevents that fraud from ever taking place. This allows insurance companies to perform risk assessments before they even begin to offer a service.

Improving Behavioral Policy Pricing

Auto insurance companies will be able to leverage sensors employed by the Internet of Things (IoT) to gather personal data on a customer’s driving habits to determine a proper premium, assuring that safe drivers pay less for auto insurance. Health and life insurance companies can also utilize the technology to identify people with healthier lifestyles so that they can offer less expensive health or life insurance premiums to them.

Maximizing Customer Experience And Coverage

Today, people are inclined to do their interactions with companies through websites. This is true for insurance companies, too. Chatbots allowed through AI can offer a seamless experience for website visitors and enhance that experience based on the customers’ geographic and personal data as well as personal interactions. Customers will be allowed to customize their coverage.

How Insurers Can Prepare For AI

Because of the nature of the beast, insurance companies can’t just turn on a switch and they’re prepared for incorporating AI into their operations. Executives in the field will have to prepare their companies for a variety of changes. These include:

• Efforts by executives to better understand the benefits of AI and how the technology works.
• Creating a strategic plan.
• Developing and executing a data strategy.
• Seeking out the talent and utilizing the technology’s infrastructure.

Understanding The Technology

Those in the know of AI and how to implement it suggest that an insurance company’s IT department should not be the only parts of the organization to prepare for the AI transformation. It is urged that company executives, customer-experience teams and even the members of the board of directors should make an effort to understand AI technology. To do this, the stakeholders can explore hypothesis-driven scenarios. This includes an understanding on how to directly participate in the IoT. Projects can be initiated to test how the technology works and how the company can become a player in the IoT-based ecosystem.

Creating A Strategic Plan

Once you understand the technology, figure out how to use it in your business strategy. This calls for a long-term strategic plan that allows a transformation over time and that touches all aspects of the companies operations, how the company seeks out talent, and what technologies to incorporate into the plan. To get a leg up over their competition, some insurance companies have started venture-capital projects, purchasing appropriate tech companies, and forming partnerships with academic institutions. The emphasis should be on things that the company wants to invest in.

The plan should include benchmarks and checkpoints in order to evaluate the process so you know if the plan needs to be modified.

Prepare for a better customer engagement and be flexible about changing product design.

Developing and Executing A Data Strategy

The use of AI is based on obtaining a lot of data. The success of your company will depend on the volume and quality of that data. The data you obtain should be from a large variety of sources. Therefore, you will have to develop a plan of how to gather, structure, and act upon implementing an operation based on that data. Expect that the data will create a need for new analytic insights and capabilities. Always keep in mind that acquiring this data should be achieved in a cost-effective manner.

Your strategy needs to include different alternatives from where you can obtain and gain access to external data and how to combine the data with internal sources. Consider having a plan that involves the acquisition of data assets and providers, licensing data sources, involving data APIs and partnerships with data brokers.

Finding Talent And Connecting With The Technology’s Infrastructure

To make all of this work right, your company needs to have people who have the right attitude and have the knowledge and skills necessary to integrate with the technology. The new insurance worker must be technologically savvy and creative and should be able to thrive in a machine-supported work environment that is continuously changing.

To be successful in the transformation into AI, your company must make a strategic effort to recruit people who are comfortable in this realm. They include data engineers and scientists, technologists, cloud computing specialists, and experienced designers. To assure that the crew continues to be knowledgeable and skilled in AI, the company should include education or reskilling programs. This capability can be a partnership with an in-house entity and an outside source such as a university.


Transforming an insurance business into one that incorporates AI does appear to be a daunting task. However, if you want your company to succeed in the competitive trade of insurance where there are companies already taking the steps to utilize this technology, a successful transformation is essential.