Most insurers already using AI technology have focused their investments on customer service projects such as chatbots to automatically capture customer details and respond to queries. For insurance, the best applications for chatbots are product management, marketing, underwriting and contracting, and policy and claims processing. This is shown in a recent AI study by Cognizant. Chatbots can be used to create quasi-instant personalized product recommendations and quotes, allowing consumers and business customers to purchase most insurance policies online in a matter of minutes. For example, insurers likeMetLife are using the chatbot Amelia to make decisions based on real-time conversations through a combination of machine learning and natural language processing.
Faster, more accurate underwriting
AI technologies can now also be applied to a wider range of data sources to refine risk assessments and quotes, such as automatically analyzing real-time data from security systems or using drones in underwriting homeowners insurance applications.
For car insurance, AI tools enable the analysis of telemetry data as the basis for quotes, providing insights into driving behavior. This includes average driving speed or accelerating and exceeding speed limits. Zurich Insurance Group partners with Swedish InsurTech "Greater Than" to evaluate a potential customer's driving record against a set of reference profiles created from data collected over more than a decade. The company can then tailor its customers' premiums to their exact individual driving habits.
Redesign the processing of insurance claims
Insurance claims processing is just another area where AI can be used to automatically review thousands of unprocessed claims when action can still be taken, rather than reviewing a selection of claims that have already been completed. This would allow insurers to escape the reactive model practiced to date, where claims are settled after a loss, and instead adopt a proactive prevention model to avoid losses in the first place. For example, an industrial property insurance provider can use data generated by smart buildings to help its customers mitigate the risk of water or fire damage. With the information generated by telematics devices in vehicles, the car insurer can give its customers feedback on their driving behavior.
Now is the time to introduce KI
The insurance industry is currently experiencing an AI revolution. Established providers have two options: invest significantly to compete with disruptive InsurTechs, or partner with this innovative competition to leverage technology.