Technological development has been the defining aspect of modern society, as we well and truly enter the digital age. Tech innovations have not just established an advanced future in consumer goods – as smart devices become all but ubiquitous across populations in the developed world – but also form the bedrock for systemic change within industries of every stripe.
Even the world of insurance has been indelibly impacted by advancement and disruption through new discovery and invention, with new tools and processes paving the way for a near-unrecognisable industry landscape. One of the leading innovations that has near-boundless application in most fields is that of AI, or artificial intelligence. Automated systems are nothing new, but intelligent systems are – and they are getting more intelligent by the day.
Functionally, AI is not the sentient system many might recognise from science fiction; rather, it describes a self-teaching, or machine-learning system that can supervise its own decisions and select for ideal outcomes in given situations. AI algorithms are behind recent advancement in autonomous vehicles, and have also found their way into consumer products and services from smart home devices to media subscriptions. But how exactly will this technology disrupt the insurance industry?
One of the leading ways in which AI can positively impact the insurance industry relates to the direct act of processing claims. Claims processing is necessarily administration-heavy, requiring the comprehensive filling-out and filing of various items of paperwork, as well as constant communication between insurance companies and parties present for a given incident.
AI algorithms can take the load off administrative personnel within an insurance company, collating, filing and even communicating on their behalf and removing hundreds of man-hours from each claim in the process. Through this, more claims can be fast-tracked and less assets frozen.
This AI-led approach to claims processing can have its own positive impacts on the consumer side, too. For one, minimising the number of man-hours required to process claims and manage customers has the potential to significantly reduce company overheads – enabling insurance firms to offer better deals on multi car insurance and other high-demand plans.
AI systems can also take more direct control of pricing plans, by undertaking the majority of the heavy lifting involved in investigating customer liability and risk. Not only are machine-learning algorithms faster at risk analysis, but also more accurate – minimising long-term costs and maximising customer intake.
Lastly, AI algorithms enable insurance firms to more accurately detect fraud, and more agilely avoid the financial consequences of fraudulent claims. This is because AI programmes are uniquely able to analyse ‘big data’ retrieved from vehicle sensors, ascertaining more empirically how an incident may have taken place. Fraud is a large outlay for insurance firms of any size, and cost minimisation here can be profoundly impactful as a result.