The impact of artificial intelligence on the reinsurance sector

The Insurance industry, which is heavy on data and processes, has been an early adopter of new technologies, including Artificial Intelligence [AI] & Machine Learning {ML}. Businesses are also partnering with other tech firms to enhance their offerings.

We are now in the era of the Digital revolution, where there is extensive automation of systems and machines are taking over tasks that were handled by humans earlier. Robotic Process Automation [RPA], for example is used to increase efficiency and accuracy [when it comes to certain processes that are repetitive, and high volume].

How is AI a game changer in the reinsurance sector?

Digital adoption in reinsurance will have a direct impact on operational efficiency, reducing operational cost and improving accuracy. We have listed down the three major impacts that AI has in the re[insurance] sector.

1. Redefining basic reinsurance business

Traditionally, the insurers and the insured worked with two different sets of information. They connected only when it was time for some action to be taken — renewal, maturity or claims. But then with the adoption of new technologies and systems, real time data has become available to both the parties.

In fact, today, data can be accessed from any device, anywhere and at any time. Web and mobile apps have made accessibility easy and with AI, this becomes a seamless experience for the customer and reinsurer.

Insurers can thereby offer,

• Personalized customer experience with better underwriting abilities
• Automation of claims analysis and settlement
• Innovation through early detection of risk and upcoming trends
• Reduction in acquisition cost of new business
• Business intelligence with real- time based dashboards for data driven & informed decision making

2. Transforming the risk element

Risk can be divided into two parts. The first part can consist of operational risks while the second part can be the identification of possible risks.

When RPA is used in collaboration with smart data extraction tools, reinsurance companies can deal with the high volume of repetitive tasks. This will help manage the data that is gathered from various sources — some of which is unstructured. Automation can reduce the TAT in quote generation for reinsurance contracts. Apart from this, RPA also helps in creating a single repository for the documents submitted, easy tracking and faster claims processing as well. A critical aspect of advanced analytics is the catastrophe risk modelling as it has a direct implication on risk selection and prevention.

Moving on to the second kind of risk, identification of potential risk elements when it comes to the entire process is a key task for reinsurance firms. For example, if there is a bug in the automated system, and it has generated a report that is inaccurate, or if the terms offered to the customer are unsatisfactory, then the risk transfer instances are quite high. The business of reinsurance is one that involves a high level of risk, which translates into quite a large sum of money that is at stake.

3. Reinsurers & the need to integrate with AI

In this competitive market, it is essential to stay ahead of the game and the only way up is by embracing these changes. Portfolio optimization by assessing the real time data will help them shorten the decision making time and provide customized services to the clients. Natural language processing [NLP] and Internet Of things [IOT] need to be incorporated into the platform to drive sales and profit.

The business of insurance is constantly evolving and there is a constant need for innovation along with adaptation of the new tools and technologies. Apart from these, reinsurers are also looking at Customer Analytics and Social Analytics, which have not been explored much in the reinsurance sector.

As the reinsurance industry continues to grow, the AI-backed approach that is data driven will prove to be the leverage for reinsurers who are forward looking.

At Neutrinos we have understood the demands of the market and the constantly changing expectations of customers. With these in mind, we have created a whole range of digital insurance-based solutions that are focussed on boosting efficiency and business growth. In fact, a few of our clients have already implemented these. If you are looking to redefine your reinsurance business, speak to us. We will be happy to walk you through our solutions.