As a highly regulated industry, insurance is one of those traditional industries that are slow to embrace technological changes. Even today, insurance is still manual and paper-based. There is still too much bureaucracy and time-consuming paperwork when signing up for an insurance policy or getting reimbursed for a claim. Reasons that hinder some people from getting insurance are its high price and not being tailored to the unique needs of each individual.
But things are slowly changing in the insurance industry, as there is a global push for the sector to increase its technological capabilities so it can conduct cheaper, faster, and more secure business. As a result, some prominent insurance companies are already investing in artificial intelligence solutions.
The capabilities of artificial intelligence are benefitting the insurance sector in various ways. Here are some of them:
Insurance is an industry that relies on data, and embracing technology enhances its capability to gain better knowledge about its consumers, helping them predict and offer better insurance policies. Using AI will be a definite advantage if your company handles more property and casualty (P&C) customers. You can use P&C insurance software to generate insurance policies with prices that will match the needs and capability of the customer to pay. Offering the right price based on what you know about your customer can make a huge difference in whether the prospective customer will sign up with you or go elsewhere.
Machine learning can help develop pricing policies to provide clients with more useful, relevant, and competitive products. For example, with service or product personalization encroaching into the insurance sector, insurers have to price their products based on customers’ lifestyles and needs.
Marketing and sales
Changing their pricing scheme and personalizing policies will increase the appeal of insurance to more customers. Insurers can use this as a strategic advantage to market their product/service as vastly different from the rest. Even slight price differences matched with more value-added options appeal to consumers, particularly those buying insurance for the first time.
The industry can use AI to identify fraud patterns and minimize fraudulent claims. For example, it will be easier and faster for AI to find abnormalities in claims data and discover false information that some customers use so they can pay lower premiums or get a bigger claim payout. In addition, with machine learning, insurance companies can improve their risk and actuarial models, allowing them to develop better products.
The price of insurance premiums includes several factors, such as claims processing. With artificial intelligence, an insurer could reduce the staff they need. AI helps automate many of the routine processes in claims management and payouts. For example, it takes around 30 to 60 days for manual processing of life insurance claims. AI can speed it up and reduce processing time to a few hours.
Moreover, AI can make insurance more appealing and relevant to consumers in various ways. By streamlining the process, developing personalized products, and shortening processing times, you provide your customers with a positive experience that can lead to more sales.