Artificial intelligence (AI) has moved out of the shadows of some science fiction movie or solely the realm of academic research by tech giants. A new breed of AI software is everywhere – from the launch of ChatGPT to Sounddraw, Legal Robot, and many others – and is increasingly being used by everyone in every industry, including the insurance industry.
So how is AI transforming the insurance industry – now and down the road. Let’s take a look.
- AI chatbots and voice assistants can provide real-time answers and advice and increase customer engagement and client retention.
- AI can be used to support underwriting and evaluate risk, which can help improve both loss ratios and expense ratios.
- AI has the potential to use predictive analytics to analyze consumer demand and create new products, such as use-based products.
- AI offers new possibilities in the pricing and product design of insurers, according to IBM: “With the combination of data, new risk characteristics can be developed to provide more accurate insurance coverage. With the willingness and consent to share one’s private data, products can be tailored more precisely for each customer.”1
- AI software can identify fraudulent claims. For example, pattern recognition on vehicle damage data can be used to detect cases of fraud. It can also detect manipulated images that would raise suspicion.
- AI tools can expedite the handling of claims and lead to faster settlement. According to IBM, AI’s image recognition can automatically read, interpret, and process documents and images (e.g., extracting information from medical records, recognizing vehicle types or evaluating damage), which assists adjusters in closing claims.
- AI is being used to automate repetitive-knowledge tasks (e.g., classifying submissions and claims).
AI is also being used to help with ideas for articles, white papers, email campaigns, and other content to support the efforts of agents, MGAs, and insurers in engaging with clients and prospects.