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Artificial intelligence is likely going to be the driving force behind many of the biggest advancements that will be made in the 21st century; from driverless cars to manufacturing robots, AI is soon to be everywhere, and the insurance industry is no different.
The insurance sector can benefit hugely from artificial intelligence, both in terms of streamlining insurance business models and providing a more accurate, tailored service to customers.
What is artificial intelligence?
Broadly speaking, AI relates to situations where tasks which usually require human intelligence can be completed by computers or machines.
While AI today might not yet pass the Turing Test, we're well beyond the days of robots being simple automated machines with no reactive intelligence; modern AI can simulate thinking in that it can perceive, judge, and react accordingly to millions of unique situations - as we are beginning to see in the case of autonomous cars.
While AI isn't truly intelligent in the way that humans are, it does mean that modern machines are capable of undertaking much more complicated tasks than those of the past.
Artificially intelligent systems use algorithms to study data - including text, speech, images, and numbers - and identify relationships and patterns in that data, providing invaluable insight into optimising strategies and solving real-world problems.
How is AI already at work in insurance?
The insurance sector has been somewhat slower to change with the times in comparison to others; many insurance providers are still bogged down by paperwork at a time when much of this bureaucracy can be streamlined and money saved.
Not only does this mean more time spent on low-value tasks by staff, it can also be off-putting to customers who often have to spend hours on administration when putting in a claim. That said, the industry is beginning to see the value in AI, and there are a few ways in which this technology is already being utilised in insurance.
The Association of British Insurers (ABI) claim that fraudulent insurance claims that £1.2 billion of fraudulent insurance claims were made in the UK in 2018 - that we're aware of. The insurance industry is particularly vulnerable to fraud, and AI has so far proved to be particularly useful in identifying fraudulent patterns quickly and accurately.
As more insurance policies are issued and managed online in the coming years, AI will no doubt be even more effective in identifying these patterns and flagging them during the claims process.
Chatbots can often be utilised to provide customer service online, answering the vast majority of common customer queries whilst directing more complicated questions to customer service staff.
AI can also be involved in marketing and customer research in order to more accurately profile customers and to provide a more tailored, targeted customer experience.
For example, natural language processing tools can scan social media platforms and forums and aid in the development of new insurance products which are more in line with the needs of the modern consumer.
When claims are made, most insurance providers require human staff to process and investigate the claims in order to correctly assess their eligibility. In turn, the labour costs of this step push up the costs of insurance premiums.
Much of this can be done by AI with the correct systems in place: some AI systems can now even assess damage from photographs, meaning that sending inspectors to make reports and photograph damage needn't always be necessary.
By utilising AI software to initially record, verify and assess a claim, operations can be streamlined and those savings passed on to customers.
Underwriting risk factors
AIs can now assist underwriters to provide tailored, accurate policy quotes based upon the reality of a customer's lifestyle and choices. For example, life insurance policies can utilise data from fitness trackers to offer personalised rates based on a customer's activity levels, resting heart rate, and other relevant lifestyle factors.
AI software can also quickly assess risk factors from millions of perspectives, considering many factors which a human underwriter might miss.
For instance, a fire might be more likely to break out if a house is positioned next to a restaurant, but a fire station located just down the road also reduces the average impact that a fire might have. In this way, AI software is more able to draft fair, personalised, accurate insurance policies which are tailored to each situation.
How will AI change the insurance industry in the future?
The future of the insurance industry does not rely so much on AI technology advancing but on developing systems which integrate existing AI technologies more seamlessly with modern life.
For example, the gradual spread of AI sensors in cars, which will likely become more commonplace as we move from generic car insurance quotes to tailored quotes based upon a customer's driving habits.
We can also hope one day in the near future to see insurance policies become more holistic, again based on accurate data provided by integrated AI systems including car sensors and fitness trackers.
The days of one-size-fits-all insurance policies are likely almost behind us; this, too, may have some positive effects on the world around us as customers may put more effort into avoiding 'high-risk' behaviours in order to keep their insurance costs low.
How can AI be implemented in insurance software?
One of the easiest ways for insurance brokers to take advantage of AI technology is to simply purchase insurance software which utilises AI.
At Artificial, we have designed unique software which can be used to digitise the quote, bind and issue process for commercial insurers; our AI insurance software can help you to collect and analyse data, optimise your pricing and policies to meet customers' individual needs, and distribute your products digitally in a way which is convenient for the customer - all while streamlining workflow for your staff.
Artificial is an insurance software provider using AI and machine learning to make insurance frictionless. For more information about our industry-leading software and what it can do for your company, please don't hesitate to get in touch with us or request a demo.