When it comes to digitization, the insurance space hasn’t particularly been at the forefront of leading in technological innovation. And it’s only fair as a colossal amount of regulations combined with thousands of users’ sensitive information makes the insurance industry cautious in adopting new technologies. But, things are gradually changing!
As per Genpact’s AI 360 report, the adoption of artificial intelligence in insurance is rapidly increasing, with 87% of insurance carriers investing more than USD 5 million in AI-related technologies each year. Digital revolution is everywhere, increasingly transforming conventional business models and adopting digital solutions.
As someone from the insurance sector, it is quite natural to be still on the fence about adopting artificial intelligence in insurance. To alleviate your fears, our AI experts address the elephant in the room – how introducing artificial intelligence in insurance will impact the current legacy processes.
Current Scenario for Insurance Companies
According to the survey from global insurance leader EY that was conducted on more than 100 companies –
- 79% regretfully reveal that they are yet to think of going digital or are in their learning phase
- 57% said they own business operating models with no support for digital platform/solutions
- 89% don’t emphasize on previous interactions while serving customers with product/service recommendations
This shows how the insurance industry is struggling to comprehend and leverage digital advancements. The survey also illuminated some of the key challenges as faced by these insurance leaders. Some of them are:
1.Digital capabilities are not meeting digital goals
On a stage of global digital leadership, companies aspiring to experience potential improvements in their digital objectives have failed to achieve desired results. Some of them admit to reaching somewhere near the target, however, those boasting digital transformations, are only 10%.
2.Much resistance from ambiguous insurers
Some of the negative elements that stymie the integration of all things digital are legacy processes, plain tech power, non-innovative approach, sluggish delivery and other internal constraints. Companies are still to overcome their ambiguity and hesitation towards digital intelligence to discover future business opportunities and unique potential for consistent growth.
3.Conflict among distributors
Another factor that hinders digital implementation in the insurance sector is resistance from agent channels and distributors. This is why it is essential to eliminate inhibitions and clarify misgiving developed against investment in digital movement. Having an honest value proposition to improve customer experience can help alleviate the tension.
4.Poor mindset showed towards digital analytics
Customer segmentation, behavior analysis, and predictive modeling are modern drivers of marketing potential set in motion by smart data-driven technologies. Without installing capable analytics, it is impractical to draw maximum value from the implementation of the digital strategy.
Social media and mobile – still marginalized
At times when digital devices are indispensable, it is unreasonable to ignore the power of bringing insurance operations on mobile and staying connected to maximum prospects through the myriad of social media platforms. Since social media help make your marketing efforts more effective and engage with the digital-savvy audience, it should be an integral part of the digitization strategy.
Soaring pressure of cost, competition and consumer expectations
Although insurance CEOs are conscious of the herald of digital disruption breaking through the industry, it will be a whole new challenge to keep up with these revolutionary changes and to see it beyond the plain integration of modern technology. Intelligent solutions must be innovative enough to foster better customer relationship and deliver customer experience in a way that inspires much-needed poise between incipient market expectations and cost optimization.
Apart from these, another pressure point is coming from emerging InsurTech entrants who are giving rise to tough competition by creating affordable solutions to reach and serve customers. What is relaxing is that to surpass this challenge, industry leaders are prepared to embrace new innovative possibilities and appreciate the role of creativity in evolving the processes and becoming a beloved brand in the financial marketplace.
Application of Artificial Intelligence in Insurance
Over the last two years, we have seen the widespread advent and adoption of AI across multiple industries (be it hospitality or be it healthcare). The idea of digital technologies ruling the financial market isn’t exactly new since Nasdaq in its early days established a secure connected network of trading desks for integrated customer data records. Many global financial companies and banks in those days relied on punch cards and basic computing systems to monitor customer activities. Hence, the concept of Artificial Intelligence in the Insurance industry analyzing data, anticipating results and helping with decision making is not so far fetched after all.
AI could help banks and insurance agencies deliver service with efficiency and quality as it has done for major leaders in other industries such as Hospitality, healthcare, and customer care processes. The adoption of AI can facilitate:
- Sudden disaster-caused damage analysis
- Risk tolerance calculation and assessment for trading desks
- Transaction analysis for banks and financial organizations
- Selection of better investments based on preferences, risks and spending patterns
- Consistent optimization of customer investments and insurance coverage
- Claims analysis, asset management, risk calculation and prevention
Due to its evolved predictive capability, AI works seamlessly with ATMs, mobile payments, and online claims processing. It helps digitally connected individuals take faster and smarter decisions by improving transparency in data interpretations.
For instance, families that harbor major concerns of financial security in retirement phase can opt for investment decisions like 401(k) plans which ensure immense security. AI’s powerful analytical brainwork can guide customers while making wise investment decisions that incorporate their maximum risk potential, premiums preferences and maintenance of funding sources for 401(k) by suggesting improvements in their weekly or monthly expenditure. AI solutions can also aid in customers’ non-retirement investment decisions and insurance coverage.
AI-powered Opportunities for Insurance
Despite the fact that it is difficult to anticipate the full utilization of the applications of Artificial Intelligence in the Insurance industry and automating the business processes, market leaders are optimistic and confident when it comes to reaping the benefits it entails. A promising study by Accenture and Frontier Economics has claimed that AI will increase 10-40% labor productivity in 11 western industrialized countries and Japan by 2035. If this optimistic projection is true, the economic growth is likely to double by 2035.
Considering the current scenario, AI-based products will include insurance coverage for smart driverless cars, smart sensors and factories and cybercrime damages. Furthermore, AI will also empower important processes like claims analysis, asset management, risk calculation, and prevention. For instance, property damage analysis can be conducted through image processing part of AI in Insurance. The same machine can be used to make an informed decision about investments based on intelligent algorithms.
As financial sectors are brimming with the unprecedented bounty of financial, insurance and investment data, the need for integrating Artificial Intelligence in the Insurance industry can drive whole new growth for this industry. Powerful data management tools of AI can help people size up and navigate through pyramids of data while also helping businesses create intuitive and interactive customer experiences.
In a nutshell, here are a few good target areas where AI can achieve significant impact and emerge transformative for the insurance industry as a whole –
- Cost and customer intimacy
Adopting these technological, process-oriented changes isn’t just as simple and plain as introducing new technologies, but it is also about how innovatively to approach the idea of enhancing customer intimacy to fulfill rapidly changing market expectations and adjust cost-related constraints. We have already seen a myriad of success stories when it comes to Artificial Intelligence for Customer Service.
- Market competition and pressure
Due to heightened pressure and surrounding market competition from lean and agile InsurTech entrants, established businesses have to be prepared to battle it out and improve their methods of getting closer to customers while effectively slicing on overall operational costs.
- Innovations, challenges, and future possibilities
With a marketplace that is digitally disrupted, it is hard to merely capitalize on fundamental innovation and common margins of cost optimization when it comes to achieving better growth and revenue. However, insurers are taking the challenge positively since 67% of industry leaders (according to a PwC report) are happy to embrace fresh AI-driven possibilities and find creativity and innovation critical to their organizational growth.
Better Synchronization between Humans and Machines
Insurance CEOs (nearly 61%) are also coming shoulder-to-shoulder when it comes to gaining competitive advantages from the synchronized functioning of humans and machines applying their combined efforts in a common workforce. These new-age advancements and AI capabilities promise to rejuvenate the orthodox elements of the insurance industry as we see it now and foster a well-organized, intelligent and confident ‘growth-accelerating platform’ that reaches far from the frontiers of cost, competition, and customer satisfaction.
At Maruti Techlabs, we have worked on implementing AI technologies in multiple areas of the insurance space to achieve quicker claims analysis, automated damage analysis using image recognition, automated self-service guidance, standardized record-keeping, cost-reduction, elimination of errors and more.
Over the years, the importance of operational efficacy in customer satisfaction has become all the more prominent. There is no better time to grab the opportunities brought by artificial intelligence in insurance.