Artificial Intelligence in Life Insurance (The Road Ahead)
Even though we may or may not ever achieve artificial general intelligence (AGI), it is safe to say that artificial intelligence (AI) technology has been moving forward at a breakneck pace in recent times. You may have heard about Open AI’s ChatGPT and Google’s Bard AI.
These are AI systems designed to drastically increase their users’ productivity and capacity. Will similar AI innovations happen in the insurance sector? The answer is an unequivocal yes. In fact, there is rampant AI implementation in the life insurance sector as we speak. Let us look at some of the most important aspects of AI and its synergy with life insurance below:
- Scope of AI in life insurance
- Life Insurance Companies Incorporating AI
- A.I. start-ups synergizing with life insurance
Scope of A.I. in life insurance
A.I. systems have massive potential to disrupt the status quo in the life insurance sector in India and worldwide. In fact, it is estimated that AI implementations could increase productivity and reduce expenses by a whopping 40%. Top CIOs have understood this potential and are willing to increase spending on AI technologies to improve their insurance businesses. In fact, even InsuranceLiya.com has leveraged AI to create a robust AI chatbot that can answer insurance related questions.
According to a survey conducted, over 40% of CIOs are willing to increase their expenses on A.I. and related technologies. These are big numbers, and the shift is imminent. Now, let us understand some of the scope of AI and where it will be used in the sector.
- Risk Assessment: The fundamental task of an insurance company is to assess risk. An insurance company’s profit or loss depends on the quality of its risk assessment; if the quality is high, then the insurance company will likely be profitable; if it is sub-par, then the company will be in troubled waters. How can AI increase the quality of risk assessment? Well, here’s a real-world example of how insurance companies are currently using A.I. and machine learning to assess risk. An insurance company will leverage AI and ML algorithms to screen through a variety of data that includes credit score data, social media data, and more. They will use this data to crunch the numbers using AI and ML algorithms and come up with a risk assessment score for the client. This score states the likelihood of a client initiating a claim in the future.
- Insurance Underwriting: Insurance underwriting is similar to risk assessment. Once the risk is assessed, the insurance company may or may not choose to underwrite the insurance policy. This is a critical decision that needs to be taken. AI and ML assist insurance underwriters in making this decision. Gradient AI is a firm that analyses the risk for insurance companies and advises on the underwriting process.
- Claims Processing: Imagine processing your insurance claim on your insurance company’s website, and an online AI assistant is beside you throughout the claim submission stage. This AI will answer all your queries and help you in your claim submission journey. Once a claim is submitted, similar AI systems will process and analyze this claim submission and give the claim a genuineness score. If the score is above 70/100, then the claim is passed. If it is under 70, then the claim is sent to a scrutiny department for further scrutiny. This system will fast-track authentic and genuine claims by a great deal, leading to greater customer satisfaction.
- Human Resources: AI systems can be incorporated into H.R., where employees of insurance companies can directly address common H.R.-related questions to the AI and get a relevant response to the same. This can lead to a lot of cost savings for the company.
- Customer Support: AI customer support systems are already in place, and it is likely that the quality of these systems will only improve as they become more robust. A policyholder can ask a variety of questions to the AI chatbot, and the chatbot will attempt to provide resolution for the same.
- Customer on-boarding: We feel that this is another major disruption in the insurance sector. The entire customer on-boarding process can largely be handled online through AI systems, as these systems can be highly customizable and tailored to answer specific questions. The need to have an actual person behind the chat will be limited.
Life Insurance Companies Incorporating AI
AI start-ups synergizing with life insurance
AI start-ups have taken the insurance sector by storm. A plethora of AI start-ups are now leveraging AI to build effective synergies with insurance companies. Many of these A.I. start-ups also integrate A.I. solutions with existing insurance companies for effective API integration. Some notable AI start-ups include:
- Bold Penguin
- Haptik A.I
- Toffee Insurance
These companies provide services in the areas of AI customer support, sales, customer on-boarding, marketing, risk analysis, underwriting, and more. Looking at the trend, it is inevitable that there will be large-scale adoption of AI and ML systems in the global insurance sector within the next 10–15 years.