It’s not an understatement to say that the insurance industry has notoriously delayed adopting new technology, due to precaution, cost adversity and legacy systems. But today, insurers can no longer afford to take a wait-and-see approach, as the constant evolution of technology means they risk falling behind their competitors in the marketplace.
In a recent roundtable discussion, hosted by Future Processing, AXA’s Chief Transformation Officer, Frederik Bisbjerg, and Solera’s VP of Global Industry Relations, Bill Brower, discussed the opportunities and challenges that insurers face when undergoing digital transformation. They also explored how AI is set to take over the future of insurance claims, changing the way data is processed and how fraud can be better detected.
Digital transformation in insurance
As businesses seek to be more competitive and keep up with post-COVID consumer demands, insurers are poised to leverage new digital capabilities that enable them to simplify processes and deliver an improved customer experience. Brower explained that consumers are currently spending 20-30 minutes making a claim, but soon they will be able to complete this process with a click of a button. The likes of AI powered Intelligent Triage for repair vs. total loss decisioning and guided image capture to quickly assess repair costs at claim submission, as well as AI for swift fraud detection and underwriting, will benefit both businesses and consumers.
However, digital transformation in insurance is still in its infancy. Many insurers are currently grappling with the growing number of technology options available to them and considering how they can best utilise these tools. For some businesses in this sector, Artificial Intelligence (AI) is the obvious choice, as it can help improve data processing, insurance bpo services, pattern recognition, and fraud detection. Machine learning, natural language processing, and blockchain also offer different ways to optimise risk assessment, improve claims processing, bolster customer interactions, and secure private information.
Digital transformation also has a part to play in improving customer experience across the insurance space. In a recent survey commissioned by Future Processing, around one in three consumers stated that insurers are failing to make efforts to improve their customer experience, with 85% claiming that insurance companies are neglecting the potential of AI-driven solutions. This highlights the importance of insurers reassessing their processes with the help of technology in order to deliver more satisfactory customer experiences.
Introducing automated data processing
The volume of data generated today is growing at an exponential rate, with insurance companies challenged with how to manage these datasets. Manual data processing has limitations and is vulnerable to human error and delays, but machine learning and AI algorithms promise to drastically streamline this process for insurance companies. Claim intake, evaluation and settlement are just a few of the processes that AI-powered systems will be able to improve, making the entire process more efficient and improving the overall customer satisfaction. What’s more, automation powered by AI algorithms and machine learning refine manual processes over time. These technologies use real time data analysis to help insurers make quicker decisions, covering areas such as claims processing, underwriting, fraud prevention and risk management.
The main use for AI lies in its ability to analyse vast datasets and uncover hidden insights through data overlay. By combining varied data sources, insurers can identify trends, patterns, and relationships that were previously undiscovered. By gaining a comprehensive understanding of data, insurers have the ability to offer tailored insurance solutions, personalised risk assessments, and policy recommendations to their customers alongside competitive prices. These key trends and patterns, once identified, can be used strategically to improve the entire customer experience.
Spotting patterns of fraud
One of the biggest challenges in insurance claim processing is detecting fraudulent claims. Traditional technology solutions often overlook key details, leading to increased losses and higher premiums for honest policyholders. As part of their digital transformation efforts, insurers can use AI for anomaly detection, alongside machine learning techniques that will identify suspicious activities or behaviours and indicate potential fraud throughout the claims process. Implementing this new method of fraud detection not only speeds up claims resolution and reduces financial loss for insurers, but also creates a more secure environment for both insurance companies and their policyholders.
The increasing need for insurance companies to update their cybersecurity policies is evident, as highlighted in Future Processing’s survey findings. 81% of respondents agreed that insurance companies should enhance their cybersecurity policies, with a further 84% stating that insurers need to update their existing cybersecurity policies to better address the evolving digital threats. The survey also highlighted consumers’ increasing concern, with 72% of participants believing that the current cybersecurity policies offered by insurance companies fall short of meeting the needs of the modern insurance industry.
Ingesting legacy data into new platforms
Transitioning from old systems to emerging technology platforms is a complex challenge, particularly when dealing with vast amounts of data and legacy systems. Bisbjerg explained that it is difficult to digitally transform established businesses due to bureaucracy and internal systems that make it more expensive and time consuming. As a result, the average time it takes an Insurtech to turn an insurer’s demands from pilot to implementation is 12 to 18 months.
He also added that insurers must carefully assess the data they have obtained and ensure it is compliant within relevant laws and guidelines, as well as consider implementing their own guidelines to maintain data security and privacy. This is vital to a successful integration of data into new platforms, as it paves the way for seamless AI adoption and greater efficiency in the insurance claims process.
Looking to the future
The future of insurance looks bright, with AI playing a critical role in driving insurers digital transformation efforts. From automating data processing to recognising patterns and detecting fraud, AI-driven solutions promise to enhance every aspect of the claims process. For many insurance companies, embracing AI technology presents an opportunity to deliver exceptional customer experiences and bolster their cybersecurity efforts. As the insurance industry continues to evolve, one thing is certain: those who harness the potential of AI will lead the insurance industry to a more efficient and cost-effective future.
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