Will Artificial Intelligence Make Insurance Smarter?

By Catherine Powell

Image courtesy Pixabay

If you own a top-of-the-line vehicle, you probably realize that artificial intelligence is built-in at the factory.  Everything from automotive autopilots to AI-enabled GPS navigation is standard in luxury cars these days. However, what you may not know is that AI isn’t only being used to help you get from Point A to Point B safely and efficiently, it’s also being used by more and more insurance companies to better serve their customers.  Below are ten ways that AI is improving insurance delivery.

1. Application Processing – Before AI, getting insured could be a complicated process.  If they didn’t have an agent, most consumers wound up combing the Internet, calling a toll-free number, or texting their friends to find an agent.  Then they had to make an appointment, talk to the agent, and fill out a lot of paperwork before signing a contract and waiting for the documentation to be emailed or snail-mailed to them.  With AI-enabled apps, agents and consumers can now complete the process more efficiently by accessing what’s known as on-demand insurance.  Instead of waiting hours or days to be insured, AI means you can get covered the same day in most cases.

2. Claims Processing – The advent of AI has streamlined the channels of communication within insurance companies as well.  Instead of having to wait for weeks or months to get paid after submitting a claim, many insurers now use artificial intelligence to expedite the claims process.  That means insurers no longer need to shuttle a claim from department to department to complete the process.  AI makes it possible to fast-track everything from communication and decision-making without having to process claims by committee.  This efficiency not only allows customers to get paid faster, but it also saves the insurers money by reducing the manhours needed to process claims.

3. Cost Estimates – One of the best time savers for policyholders is achieved when an insurance company uses AI to assist with estimating the cost to repair or replace items that have been damaged, destroyed, or stolen.  Instead of wasting hours and hours trying to determine the cost of supplies and labor, AI-driven databases are now being used to help fix the costs of everything from materials to contracting, which saves both adjustors and customers time and money.  

4. Insurance Pricing – If you’re tired of being lumped into an impersonal wad when it comes to insurance pricing, AI can provide a more personalized quote.  For more than a century, drivers have been charged for auto insurance based on herd demographics.  That means what you pay was largely based on your age, sex, address, and driving record, regardless of how well you drove.  There was no way to personalize a driver’s auto insurance quote.  Today, all that has changed. Everything we do on the road can be monitored, collected, and analyzed to save drivers money, provided they opt-in to allow their insurer to access the data.  That’s right, many insurance companies have adopted what’s known as telematics which can be used to provide underwriters with information on when and how often you drive, as well as how hard you accelerate and apply the brakes.  Not only can the data save participating drivers money, studies have shown that this type of program can also help teach motorists to improve their driving habits.  Ask your agent if your auto insurance carrier participates in telematics.   

5. Fraud Detection & Reduction – Fraud costs everyone from the insurer to the insured.  In the past detecting fraud was a long and arduous process that wasn’t always successful.  Now, insurance companies have the capability of employing AI analytical tools that not only root out fraudulent claims but also can be used to investigate the veracity of every insurance policy being written before a claim is submitted.   

6. Improved Underwriting – Insurance underwriting is based on risk.  The risk to an insurer is a moving target that used to rely on standard risk assessment models to interpret statistics and determine the cost to insure an individual or company.  Before the advent of the Internet of Things (IoT), empirical data was hard to come by.  Nowadays hard data floods in which can make it difficult for underwriters to sift through the statistics to arrive at accurate risk-assessment models.  The advent of artificial intelligence to analyze data in real-time has been a godsend to underwriters and insurers alike.  It also means that policyholders receive a more accurate insurance quote based on their individual risk profiles. 

7. Cloud Computing – Another cost that used to be passed along to policyholders was the cost to install, program, and maintain in-house computer servers.  As of January 2022, 90% of insurance companies nationwide are employing cloud computing to conduct business processes.  This shift has made it easier to store, analyze and share data 24/7 without compromising data security and integrity.    

8. Customer Service – If you hate waiting on hold like I do, then you will appreciate the improvement in customer service that AI is capable of delivering.  Instead of waiting and waiting for an operator, AI-enabled phone systems are capable of directing you to the correct department without human intervention.  This same AI technology also makes it easier for customers to access information via chatbot instead of having to call the insurer.

9. Automation can be a good thing. – Many of the processes in the insurance industry currently being performed by human beings can and will be automated.  Artificial intelligence means that mundane repetitive tasks can be moved from human to machine, freeing up those employees to help policyholders address their needs.  

10. AI will continue to be developed by insurers. – The future of insurance will only be enhanced by using AI.  Unless you enjoy waiting on hold or talking for hours to agents and adjustors, artificial intelligence is a smart move that will only enhance a policyholder’s experience. 

Catherine Powell is the owner of A Plus All Florida, Insurance in Orange Park, Florida.  To find out more about saving money on all your insurance needs, check out her website at http://aplusallfloridainsuranceinc.com/