How AI Will Disrupt the Insurance Industry
“AI” (Artificial Intelligence) has been a hot topic recently – everything from self-driving cars to smart home assistants like Alexa and Siri are riding a wave of huge interest from the general public. But homes and cars aren’t the only thing changing with advanced technology in the AI sector. The insurance industry is one ripe for disruption, and what better way to disrupt it than with artificial intelligence? AI is being hailed as a monetary saviour for insurance companies and policyholders alike, able to transform the insurance industry wholly.
In this post, we’ll take a look at three ways the insurance industry will be upended by AI.
- Claims. On the side of the policyholder, the average cycle time of a claim is two weeks or more. With AI claims, that time is reduced to 2-3 days. On the side of the insurer, insurance fraud is a huge issue in the insurance industry, estimated at over $2 billion in Canada. AI-powered claims technology replaces manual fraud detection with automation, stopping many cases of fraud from slipping through the cracks. Companies like Shift Technology, which has processed close to 100 million claims, has been accurate in fraud detection 75% of the time. That number is only expected to climb. On the side of the policyholder, the average cycle time of a claim is two weeks or more. With AI claims, that time is reduced to 2-3 days.
- Customer experience. It seems hardly anyone is completely satisfied with their insurance-buying or changing experience. Insurance has been an industry strife with depersonalization and without warm, fuzzy feelings. But AI could change all of that. AI could enable a buying experience without hiccups, and allow people to purchase coverage specific for certain times and items (like Lemonade…more on them in a moment). In this way, even after the initial purchase, chatbots (which are exactly what they sound like) can follow up with customers or assist them with billing information, claim handling, or other questions consumers might have – all in a friendly, personalized way.
- Data. Many insurance companies already offer discounts to drivers who submit their driving data and allow in-car monitoring to the company. According to Forbes, AI could “take this one step further by recognizing GPS patterns with the data, inferring road and traffic conditions, and even predicting and helping avoid accidents”. This could save lives and money. In addition, this type of data collected by AI could also affect health insurance (with wearable sensor data) and other industries, and toss out costly assessments and replace them with data provided by AI.
One insurance company that’s already implementing this technology?
Lemonade. They use AI and bots to sell insurance, they take a flat fee, and pay as many claims instantly as soon as possible (according to their website). To get Lemonade insurance, you can use an app or go through their website, but there are no arduous phone calls. Currently, they are only available in the States, but this model is expected to grow.
So while dealing with your insurance company on the phone is probably one of your least favourite experiences right now, pretty soon, with the help of AI, it could become much easier.
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