Everything You Need to Know About Artificial Intelligence and Machine Learning in the Insurance Industry


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The rising impact of digital technologies is well and truly providing enterprises with a huge amount of data, thus opening up various avenues to Big Data and Analytics. Analytical models can predict results, discern patterns and accentuate outliers amongst another set of business cases.

By definition, insurance happens to be an industry that is predominantly built around risk & companies greatly depend on their ability to predict what risks a person, company, or organization represents. With a large repository of accurate data, they are more likely to make a correct prediction, saving themselves money or earning extra revenue.

The insurance industry is facing tumultuous times with technology shaping the way it operates. And, in a bid to cover the possibilities and challenges of inculcating artificial intelligence and machine learning in the insurance industry, we have already learned a lot in our four-part series.

The first 3 parts can be found as elucidated below –

Part 1 – How is Artificial Intelligence in Insurance addressing the industry’s key challenges?
Part 2 – How can AI in the Insurance Industry help with Fraud Detection and Claims Management?
Part 3 – How effective are AI, Blockchain and IoT in Insurance Claims Management Process?

In the introductory piece, we analyzed the existing scenario of the insurance industry, considered the challenges it faces today and skimmed over the opportunities AI presents to eliminate hurdles in insurance on the path to digital.

We followed that up with a second in-depth article that detailed how artificial intelligence is helping the insurance industry prevent frauds and false claims – a pressing challenge for organizations in the space. We concluded the report with a glance over the possibilities further down the road at the intersection of AI and insurance companies.

Next, we comprehended the role of AI, blockchain, and the Internet of Things in claims management. Being the leading and few of the most influential technologies right now, AI, blockchain, and IoT go beyond the limitations of legacy systems to prevent frauds and facilitate efficient claims management.

As a conclusion to this intensive series on the applications, opportunities, and roadblocks of AI in insurance, let’s look at some more use cases and discover what opportunities chatbots and AI bring for the insurance industry collectively.

Chatbots and The Insurance Industry

Chatbots are employed in various industries today and pose massive opportunities for the insurance industry. They are digital assistants that can conduct natural conversations with humans and thus undertake initial exchanges, eliminating the need for a human workforce in the beginning stages.

Facebook messenger and website-based chatbots are among the most popular types used today. According to a report by Business Insider, four top messenger apps have a combined user base of more than 3.5 billion, exceeding the combined user base of the four largest social networks.

A recent survey of 6,000 people around the world revealed that nine out of ten users would like to use messenger apps to engage with businesses. Messaging is a preferred channel for consumers all over the world, and it only means better and more meaningful applications of chatbots in the insurance industry.

Artificial Intelligence and Machine Learning in the Insurance Industry

Steve Anderson of The Anderson Network, a known authority on insurance tech and agency productivity, says that machine learning capabilities are already being used in the insurance space in the form of automated policy writing.

While this is only a drop in the ocean considering the scope of Artificial Intelligence and Machine Learning in the Insurance industry, Steve remarks that these capabilities will soon be used to streamline processes that are internal (helping employees with information) and external (improving customer experience). However, Steve adds that legacy systems are a hurdle for insurance companies looking to implement the latest tech.

Let’s take a look at the potential use cases of AI and ML in Insurance –

1. Lead Management – AI can assist marketers and salespeople in pointing out leads by extracting valuable insights from data which may have been left out. Insurance firms can gain a competitive advantage by tracking leads and managing them with an AI-enabled solution. AI can also help enrich data with information collected from social channels or weblog streams. AI can personalize recommendations to buyers according to their purchase history, potential spend, thereby improving chances of the cross and upsell. AI can also tailor lead interaction at call centers, bringing in the new revenue and retaining customers with customized content.

2. Fraud Analytics – The claims expenditure for insurance companies is predicted to go up by 10 percent, and up to a billion are expected to be added to their fraud-related costs. Artificial intelligence can help insurance organizations query the alleged events of an accident while claims processing. AI software can reaffirm weather reports if a car driver claims their vehicle broke down due to bad weather. Fraud claims can be prevented as AI software will confirm it or not the asserted claims are true. A human insurance agent can then dig a claim request further if needed.

3. Claims Management – AI can help generate structured sets to organize claims data and process them faster. Intelligent solutions can recommend templates for incoming claims, assisting insurers to capture all data in one go. Speech-based claims can be converted to written text with help from an AI device, making documentation and claims management easier and more efficient. Keep human resources off the initial claims process with chatbots to interact with insured users and help them report incidents without human intervention. Allow AI to gauge incident severity by processing images captured by the insured at the place of the accident.

4. Financial Assets – The insurance industry gets hit by government policies, budgets, and regulations. Improve your rate of reaction to changing trends, spot opportunities and challenges early on with AI systems that analyze news and social media trends and look for potential signs. Leverage AI to make portfolio decisions based on market analysis to recommend financial actions to high net worth people and detect market issues. Allow employees to work with a digital assistant to dig up financial data specifics. Additionally, analyze investor calls with asset providers to identify anomalies early on. AI-enabled software can help insurance companies manage assets efficiently.

5. Automated Input Management – An automated and intelligent input management solution can help insurance companies manage their increasingly growing database and make the available information more useful and valuable. With processes such as input recognition, routing, and clustering, it is possible for insurance companies to avoid manual data handling and data management. Efficient input handling will automate the routing of issues to the right solution provider within an insurance company.

6. Intelligent Virtual Assistants – Chatbots have been assisting live agents in companies for a while now. Customers appreciate point-and-click interfaces with a mix of DIY problem-solving. With advancements in Natural Language Processing, AI solutions will be well-equipped to handle more complex communications with users. The use of smart chatbots will justify the need for well-versed, quick solutions as the gap bridged between natural language and artificial intelligence.

What Has and Remains to be Changed for the Insurance Sector

Steve Anderson thinks AI and Blockchain are still in their infancy when it comes to their use in insurance. He said, “Blockchain is a whole other area that will impact the insurance industry. Although, I think it will take a few more years to learn about the benefits of Blockchain implementation for insurance organizations. Several insurance organizations are spending significant time examining Blockchain to determine how it can be used to take ‘friction out of transaction’ for consumer interaction.”

The pace of change and digital disruption has been slow for insurance. Steve’s suggestion to companies wanting to adopt new technologies is to install a mindset shift across the organizational values. Being risk-averse, he adds, does no good for insurance companies. Most companies sabotage their growth fearing what lies ahead with tech-rich solutions.

In the past, here’s a wrap of how the insurance sector has changed –

(i) Today, insurers are customizing rates for individuals based on their specific data and historical records. Artificial intelligence is helping them achieve this scale of personalization.

(ii) Insurance companies are also able to bundle services and products for each user separately, given the demand and use of services for them.

(iii) Since sales and marketing departments get better visibility of customer interests and insights on buying behavior, they can sell according to buyer intention.

(iv) AI systems can analyze data and offer valuable insights into customer satisfaction, allowing customer service reps to handle issues more effectively.

Chatbots – A Game-Changing Strategy for Insurance

Create a competitive advantage by building a chatbot or assistant that frees up your human resources from repetitive and monotonous work to help them focus on growing and expanding your business.

To begin chatbot and subsequent AI adoption for insurance, apply these five effective principles –

1. Simplicity – Since chatbots help achieve a lot, interaction with them needs to be seamless for everyone involved in the organization. Eliminate any complexities and keep your virtual assistant simple, to help your workforce perform tasks with it. If using your chatbot means a lot of hassle, your employees will do otherwise.

2. Uniqueness – Neither chatbots nor virtual assistants are rare in the insurance space. Both will witness future proliferation, too. Therefore, to maximize advantage over the competition, look for ways to make your chatbot stand out from the crowd. A chatbot’s distinguishing features can be its usability or look and feel or its implementation.

3. Consistency – A chatbot is never a standalone function. Aim to integrate it with systems in and around your organization seamlessly. This will help users access your chatbot on any platform and device they use to engage with you. Talk and reach to every user through their mode of interaction and provide a consistent experience throughout.

4. Security – A lot is at stake when security is. Users won’t employ your chatbot if they are not completely satisfied with the security policies and practices you implement. This is especially true in the case of the insurance industry. Strong security needs to be top-of-mind with your chatbot developers to prevent any brand defamation.

5. Connection – Your chatbot needs to interact with your users in the language they use. If a sophisticated chatbot fails to understand the language and common phrases your customers use, its sophisticated language is of no use. Understand your audience and the way they interact with each other and to devices to make a chatbot that connects with them on a personal level.

Chatbots are a long way from handling all communications independently. But, we all need to start somewhere. We can help you gain a better understanding of what your insurance business needs when it comes to integrating it with AI.

Final Word

When we asked Sam Evans, Managing Partner, Eos Venture Partners Ltd., about the significant challenges facing the adoption of Artificial Intelligence and Machine Learning in the Insurance industry, the trusted authoritative expert had a few things to say –

1. The insurance industry has suffered a long period of under-investment in technology and lags way behind the financial services industry

2. Insurers deal with limited engagement points and find it hard to capture and leverage data

3. Insurance companies face distrust and a fragmented distribution chain

However, Sam quickly pointed out that many insurance companies have started investing heavily in future technologies such as AI and are already seeing results.

When asked about the visible applications of Blockchain in insurance, Sam said, “Blockchain is also moving from the experimentation phase to concrete use cases in insurance. For example, Maersk has announced a blockchain solution for their marine insurance. RiskBlock, a blockchain consortium, has launched a number of modules including proof of insurance and subrogation (recovery).”

If you are looking to invest in leading technologies to further your growth, consider Sam’s 3-point advice-

(a) Focus on where you can leverage external capabilities since internal teams don’t suffice when it comes to digital disruption and the fast pace of change it brings.

(b) Invent new processes for young companies and don’t mirror the ones followed by large global organizations.

(c) Strategize AI capabilities for your business so that the tangible results flow back to you. Innovation without ROI is a waste.

AI is a critical factor of success for companies in the insurance industry & at Maruti Techlabs, we empower these companies to leverage technology for fraud detection, claims management, analytics, and customer experience personalization.

With rapid advances in technology over the next 10 years, we will come to see disruptive changes in the insurance space. The winners in AI-based insurance will be carriers that adopt new technologies to create products or streamline processes in order to utilize cognitive learning insights from different data sources, streamline processes as well as cut down costs, and exceed customer expectations for individualization and dynamic adaptation.

With an ever-increasing smartphone user base and growing digital trends, Artificial Intelligence is poised for greater growth. Intelligent bots are replacing humans, resulting in full-time equivalent savings for insurance companies, especially in the sales and customer service verticals.

Our mission at Maruti Techlabs is to equalize Artificial Intelligence across a smorgasbord of industries and use it to solve business and social challenges with the insurance industry being a key focus for us.

Looking for a partner to work with you right from the beginning through to the end?

Use our expertise – we offer a free initial consultation to learn about your needs and then suggest a roadmap that we build and walk with you.

InsurTech is no small investment. Pick the right team.

Mitul Makadia
Mitul Makadia is Founder of Maruti Techlabs and a true technophile. With his industry experience, he has rapidly developed Maruti Techlabs in specialized services like Chatbot Development, Artificial Intelligence, Natural Language Processing and Machine Learning. Makadia has considerable expertise in Chatbot Development and NLP.


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