AI in the Insurance Industry

Insurance CIO Outlook | Thursday, October 25, 2018

As the use of artificial intelligence becomes commonplace, the functioning of several industries is altered significantly. The insurance space is no different.  Customer-centric models and the changing demographics, together with technologies like AI, big data and cloud, are creating a data deluge in the insurance industry. The data could prove vital in making informed business decisions with the improved systems and tools.

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Traditionally, the insurance industry has used data in improving organizational efficiencies and assisting with business processes. This manual and labor-intensive industry is expected to be intensely impacted by the use of AI. Risk groups, which were previously classified on the basis of static data like age and medical history is now analyzed using a broad spectrum of data like social media, clickstreams, and web analytics. Automated image classification speeds up the process of claims processing.  Increase in insurance revenue and frauds are detected accurately and customer churns can be accurately predicted and intercepted in real-time. The use of AI in the insurance sector is expected to lead to increased efficiency, the automation of several processes like claims, and its impact will only increase with time.

AI has benefitted the insurance industry in the following ways:

•    AI proves helpful in accessing customer data from several sources, including CRM systems, social media, weblogs, and clickstreams, and combine it into a single format for analytics. This data can help in classifying risk groups more accurately, and recognize cross-sell and up-sell opportunities effectively.

•    Insurance companies can use AI to find the most relevant products for customers. An AI platform uses inputs like age, gender, household size, postal code, annual income and number of dependants to recommend term and burial coverage alongside that of general insurance. Agents selling insurance can benefit from this information and map product variables according to specific customer needs.

•    An analytics and marketing platform built using AI enables insurance firms to understand customer objectives and reduce complexity through efficient customer intelligence. This simplifies the process of dealing with numerous dynamic and interrelated data variables.

•    Insurance industries have gained unprecedented customer intelligence using AI. Big data analytics equips intelligence companies to extract intelligence that can enable improved customer service, up- and cross-selling, campaigns to customers and prospects, and increased revenues.

The use of AI-powered machines is expected to devise solutions to major problems in the fields of finance, science, education, and medicine, thereby augmenting human potential.
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