Artificial intelligence is disrupting the insurance industry by improving efficiency, accuracy, and user experience. Dubbed insurtech, this evolution is seeing startups across the world implement artificial intelligence (AI) in their coverage process to mitigate risks in just seconds.
AI can improve processes in nearly every step of the insurance industry, from purchasing a rate to the claims lifecycle. Read on to learn about how AI is transforming the insurtech industry.
What is Artificial Intelligence?
Whether you’ve been aware of it or not, you’ve probably used artificial intelligence in your day-to-day life. AI is the technology that computers or products use to mimic human behavior. It’s the technology that your Roomba is equipped with and that the chatbot on a company’s Facebook page is using to talk to you.
By scouring through tons of data, a computer or device using artificial intelligence can make an informed and rational decision in just seconds.
Originally developed in the 1950s, there are many types of artificial intelligence today. Three of the most popular sectors of artificial intelligence used in insurtech are natural language processing, machine learning, and computer vision.
Natural language processing: In order to process human language artificial intelligence uses natural language processing (NPL). Chatbots are a great example of this technology in action: the computer processes a human request and provides a helpful response without a human worker needed to facilitate the communication.
Machine learning: This technology allows computers to scour through tons of data to find patterns and predict an outcome. Insurance comparison sites such as The Zebra use this tool to generate quotes instantly. Health insurtech companies can make a diagnosis seconds after learning of a user’s symptoms.
Computer vision: For the claims process, computer vision can evaluate damage in order to automate underwriting. This technology can also help during the insurance purchase: companies such as Pineapple let users instantly upload an item (such as a camera) to see how much it would cost to insure it.
4 Ways Artificial Intelligence is Improving Insurtech
The insurance industry is a financial risk mitigation: when a disaster or incident occurs, users who have purchased insurance will receive financial aid. Insurance companies, in turn, must weigh the cost of financially backing this risk. Because artificial intelligence allows machines to make rational, data-driven decisions (free from human error!), the technology is especially valuable to insurance companies to identify future risks.
Here are four ways AI is improving risk mitigation:
1. Automated underwriting
AI allows computers to process a claim without a human worker present. This allows claims to be processed directly online 24/7. Computer vision and machine learning work together to identify and assess damages when an accident occurs. Built-in claim tracking and reporting further streamlines the process.
2. Preventing Fraud and Blocking Hacking
The FBI estimates that nearly $40 billion is stolen annually through insurance fraud. This fraud costs both the company and the consumer money. Further, hacking presents a major risk for insurance companies. Artificial intelligence can spot irregular customer behaviors by looking at past data to identify future risks instantly and also spot fraud in real time.
3. Adding Personalization to Solutions
Insurtech tailors products for real-time reporting. On-demand insurance allows users to purchase insurance straight from their smartphone. AI would analyze a consumer’s previous driving history to generate a rate based on predicted behavior instantly.
4. Offering 24/7 Accessibility for Customers
Chatbots and other natural language processing helps cut company costs by providing access 24/7 without the help of staff. Rather than having a call center full of workers, companies can employ chatbox software to help customers file claims at all hours of the day and night. This AI tool improves the customer experience.
Insurance companies are using artificial intelligence to mitigate risks and improve the customer journey. Check out our visual below to learn about 6 insurtech startups putting AI into action.