Artificial intelligence in insurance — Trends that matter — Part 3 of 3
The first two parts of this three part blog on Artificial Intelligence (AI) looked at: Behavioural premium pricing and Customer experience & coverage personalization – the first two, of three key trends in Artificial Intelligence (AI) that insurers should bear in mind on their digital transformation journey. In this third and final part of the series, we will consider faster, customized claims settlement and review the importance it holds for the insurance industry.
Faster, customized claims settlements
Speed and accuracy in settling claims is a prime consideration for insurance business efficiencies, as well as for customer satisfaction. Here are two critical ways that AI will improve customer satisfaction after a claim is filed:
- Speed in claims settlement
Speed in settlement of claims is a metric that is much valued by customers and is one that will continue to drive policy purchase decisions.
- Reduction in fraud
The decrease in the likelihood of fraud is a key metric for insurers and will drive their decision to purchase digital solutions.
AI’s advantages in the claims settlement process
Lemonade insurance’s AI interface named Al Jim hit news headlines in January 2017 by reportedly taking less than 3 seconds to settle a claim that took a number one insurer eleven days to complete the same task.
- Savings in manpower costs
The speed of processing claims for settlement means that more claims can be processed in a far lesser time period. Going by Al Jim’s speed of processing, AI can process 15600 claims in the same time that it would take a top ranked insurer to process one claim. This allows for insurers to reduce employees in the claims department and realign them to more valued work like analysis for underwriting.
- AI is poised to disrupt insurance drastically
Insurers have seen their future and that future is one that is heavily disrupted by AI. From the way that information is gathered to how insurers interact with their customers, AI is set to revolutionise all segments of insurance.
- Fraud detection and prevention
The detection and prevention of fraud in the insurance industry due to the implementation of AI has been seen to be very successful. One of the fastest growing areas of tech adoption in the industry, over 75 percent of the insurance industry reported having utilised fraud detection technology in 2016. Incidents of fraud will see a drastic fall with the implementation of AI. This is considered one of the “low hanging fruits” as a result of the implementation of AI in insurance.
- AI increases savings
With the reduction in fraud, insurers stand to save a lot of expenses by way of fraudulent claims. One of the most common types of insurance fraud is identity theft. Here, the insurance and identity information of the insured is stolen in order to file a claim without the policy holder being aware of it or agreeing to it. AI programs are already being used to detect and prevent fraud in the areas of data security and payment/transaction fraud, and it is expected that other insurance segments will also be covered under this ambit in the near future.
Why AI matters in insurance
- Customers evaluate insurers on payout not on purchase
The proof of the pudding for insurance customers is when they need the insurer to make a payout when the event that is being insured against occurs. Insurers have come to realise that the most important metric by which customers rate them is by how satisfied they are after making a claim. AI is a game-changer for insurers in speeding up the claims process which is the crux for delivery of excellent customer service.
- AI can deliver on customer satisfaction
With many start-ups and insurers who have used AI in the claims process reporting much better turnaround times in claims processing, AI is well set to deliver on the most important metric for insurers – customer satisfaction. With traditional insurers still plodding through the manually laborious processing of claims, they are by and large viewed as a necessary pain that needs to be endured. All this can change dramatically – for the better, with the introduction of AI.
- AI enhances both the buying and claims processes
The potential improvements that AI can bring to both the insurance purchasing as well as the claims processes are immense. No longer will customers be required to fill out large forms requiring a lot of information. AI with its access to customer data, enables these processes with just a few clicks – and this has undeniable appeal to customers.
The insurance industry is set to transform significantly over the next three to five years. Emerging technologies of telematics, autonomous vehicles, chatbots and customization platforms are already transforming the way that insurers conduct business. And, the market will gravitate towards those enterprises that are able to best harness AI to improve the overall customer experience from policy purchase to the payment of claims.
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