Posted on September 2, 2018 by PINC Insurance

Our behaviour guides our experiences. We calculate, take risks and learn from it. Repetitive occurrence of a particular action helps us to evaluate a better way of doing it and reducing possible repercussions. Advancement in analytical models and machine learning has granted Artificial Intelligence a similar ability to predict outcomes, identify patterns and suggest better solutions.

Such a mature technology has a possible inclusion in real world applications like airplane autopilots, email spam filters and self-driving cars. With endless possibilities and potential practical implementations, AI has emerged as the next hot thing for industry leaders & innovators alike.

If introduced in insurance industry, AI would have a significant impact without a doubt. According to the latest Sigma report, the global insurance market increased by 4% in 2017, of which non-life insurance recorded a 5.3% growth and life insurance business reported a slight increase of 2.9%. AI could help business leaders to harness all the trends and drive savings for insurance carriers, brokers and policyholders.

Current implementation of AI in insurance industry is causing changes and resulting in potential shifts in the industry. This is how AI is could change the Insurance industry.

1) Behaviour Monitoring

The Internet of things is enabling everyday objects to send and receive data, thus resulting in a large data bank to be used by AI. Imagine, if your car is connected to the IoT then you could be monitored 24/7. AI analysing this data will help the insurer adjust the premium of the customer according to his conduct. The more calm and cautious your driving is, the cheaper the premium is.

The insurance industry was dependent on statistical sampling of past performance to forecast future outcomes. But data science has enabled predictions based on real events using large datasets rather than samples to make accurate estimations.

2) Health Monitoring

Data analysis helps an insurance company set the pricing model based on the analysis of life quality. The insurance companies could access data relating to the daily life of the insured person and monitor daily physical activity, diet, stress levels, etc. The introduction of wearables has further eased the monitoring of heart rate and blood pressure, thus making the job of AI simple.

3) Claim Settlements

The insurance industry involves data & time consuming processes, which are, at the end of the day, very tedious. Claim form input, incident documentation, medical reports and repair estimates contain either unstructured or semi-structured parts, making it much more difficult to process. By using AI assisted claim management processes, insurers can fast-track claims, reduce time and costs of processing while enhancing customer experience. Case in point, JD Power & Associates’ No. 1 insurer’s claim settlement clocked in at eleven days, while Lemonade’s AI, Jim settled a claim in less than three seconds. That means the No. 1 ranked claims department took 316,800 times longer to settle a claim than Lemonade’s AI, Jim.

All things considered, AI can be truly beneficial for the industry. A survey conducted by Accenture in April 2017 found that “79% Insurance executives believe that artificial intelligence (AI) will significantly transform their industry in the next three years.”.