How AI Impacts the Insurance Industry

CIO Review APAC | Friday, June 18, 2021

Rapid advancement in AI will lead to disruptive changes in the insurance industry, and the companies using these advanced technologies will thrive. 

FREMONT, CA: Digital transformation is a survival strategy, not a commercial decision. The insurance sector gradually realizes that this critical truth also applies to them. Insurers understand that technology is the only response and solution as they face various strategic and operational issues due to the COVID-19 epidemic. The insurance sector is undergoing a rapid and massive shift due to this knowledge, driven by a strong desire to improve client experience.

Artificial Intelligence (AI) is at the foundation of these transformations and is critical to their success. AI aims to tackle long-standing issues by integrating with existing infrastructure or replacing obsolete technologies.

Why does the insurance industry require AI now?

COVID-19, unlike other difficulties that are usually restricted to a single geographic place, has an impact on almost every country. It provided a crash education in connected living to the entire world and resulted in significant changes.

Small insurance companies are currently struggling to keep up with the surge of new demands, and most larger organizations may need to restructure to survive these trying times. In this unpredictable environment, AI will be one of the most critical variables in determining who survives.

Until recently, AI had only been employed in a limited way in the insurance industry. But AI has the potential to improve several procedures significantly.

Marketing and sales: 

Artificial intelligence (AI) can be used to price insurance plans in a more relevant and competitive manner. It can be used to advise clients on the most profitable products. Insurers can tailor the pricing of their policies to the demands and lifestyles of their consumers, ensuring that they only pay for the coverage they require.

Risk management:  

Artificial intelligence (AI) neural networks can be used to detect fraud patterns and reduce fraudulent claims. AI can also improve actuarial models and risks, potentially resulting in more profitable products being developed.

Operations: 

Chatbots can be programmed to understand and respond to the majority of client questions through chat, phone, and email. This is especially useful in instances where clients and insurers cannot meet face-to-face, such as during a pandemic. It can free up critical resources and time for insurers, which can be put to better use elsewhere.

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