Artificial intelligence (AI) and machine learning (ML) are transforming the insurance industry. Embracing the capabilities these new technologies offer can propel insurers ahead of the competition.
Experts predict the insurance industry will be the fourth largest investor in AI by the end of this decade. On average, insurers will spend $90 million on AI solutions. These solutions will help them streamline processes, enhance the customer experience, and improve productivity.
So exactly what is the potential of AI and ML for insurers? And what are the business benefits?
Artificial intelligence and machine learning capabilities
AI and ML solutions are having a profound impact on a wide range of industries. A recent report depicted the effect of AI and ML on 2,000 work-related tasks in 800 occupations. In insurance, data collection and processing tasks currently have significant automation potential.
Digital platforms that collect, sort, and analyze data provide a supporting function for underwriters. They enable underwriters to assess new applications much faster than ever before. They can also analyze claims faster. Underwriters can use the resulting information as a data-driven foundation for claim assessment.
One of the most exciting and promising machine learning capabilities focuses on fraud detection. In a self-learning model, ML applications can detect and flag irregular activity. This activity can alert insurers to actual incidents of fraud. It can also pinpoint behavior that indicates an account may be at risk of fraudulent activity.
Insurers are using virtual assistants to handle tasks like scheduling and planning. Some are integrating virtual assistants into their sales activities. Their lead management capabilities are highly accurate. This facilitates organizing leads, following up with prospects, and adjusting sales techniques.
Bots are also improving the customer experience. Chat bots can assist customers with simple tasks. Examples include requesting information and sending payment reminders. Soon, robo contact centers are likely to become the norm. They’re an affordable way to offer fast, accurate service, 24 hours a day, seven days a week.
In finance, robo advisors already provide accessible, low-cost investment portfolio advice and management. They can provide a similar function in the insurance industry. Useful applications include helping consumers compare coverage options and manage their policies. According to a recent survey, more than 40 percent of consumers are open to this application of AI. They believe it’s faster and more convenient than having to make an appointment with a live agent.
While the initial investment in AI and ML platforms can be considerable, the ROI is significant. Improved accuracy and lower turnaround time increases customer satisfaction. The process of continuous learning allows insurers to constantly improve the customer experience. This offers companies a significant competitive edge.
AI can process large amounts of data in a short period of time. This frees underwriters up to concentrate on their core business. They become more productive at assessing policy applications and evaluating claims. They can also create new products, target new customers, and expand into more geographies.
Finally, AI and ML can reduce risk. Their enhanced fraud detection capabilities can protect insurers from fake claims. Advanced AI algorithms can also provide more detailed analyses of the insurability of consumers. This reduces overall financial risk.
AI and ML can improve productivity, lower costs, eliminate inaccuracies, and reduce risk. In addition, they can play an important role in improving customer experience. As a result, insurers that invest in these new technologies can greatly enhance their competitive positioning.
For more information on IoT, please visit SAP Leonardo Internet of Things (IoT): “Connecting things with people and processes, with real-time intelligence unique to each business.”
Learn how to bring new technologies and services together to power digital transformation by downloading “The Future Services Sector: Connected Services for Continuous Delivery.”