Impact of AI in insurance

| 18 Oct 2018

People today expect 24/7 access to services, along with personalised customer support available instantly and on demand. In this competitive business environment, enterprise AI solutions are steadily enhancing operational efficiency, improving time-to-market, enabling a more intelligent way to sell and service, and much more. What does this mean for insurers and advisers? Srikanth Venkatesan, Market Leader, Insurance, APAC at Cognizant, shared his insights.

At its core, Artificial Intelligence (AI) is about embedding intelligence into machines, thereby enabling them to ‘do, think, learn’ and eventually ‘adapt’ to solving problems without real-time or pre-programmed assistance from humans. Various AI-related technologies, such as natural language processing (NLP), computer vision, robotics and speech recognition, have coalesced in recent years into systems that form AI’s technological foundation.

Potential for business growth

AI holds vast potential for insurers interested in reinventing their business models and transforming customer experience. Adoption of AI is growing in the Asia Pacific, with AI tech such as virtual assistants capable of NLP being viewed as the next big thing in customer interactions. For example, a fast-growing Singapore based insurer recently launched an AI-powered chatbot capable of responding to free-form text that may even include colloquial words and emojis. The chatbot works via Facebook Messenger and is available 24x7x365, enabling customers to choose and buy life insurance in an interactive and intuitive manner.

With so much activity around AI experimentation and implementation – combined with customer demand, cost pressures and the increasingly competitive business landscape – insurers can no longer afford to overlook AI and its potential implications. Insurers are beginning to see how AI-enabled technologies are poised to cause a paradigm shift in how they deal with clients, distribution network and how they process claims.

How can insurers leverage AI?

AI’s potential spans all insurance areas and can elevate an insurer’s ability to understand changing market dynamics, competitor activities and, most importantly, customer wants, needs and desires with unprecedented granularity.

  • Revenue expansion

The real-time learning and adaptive capabilities of AI provide a ready platform for insurers to explore new product lines, geographies and customer segments, as well as quickly identify new avenues for revenue expansion. The explosion of data sources and availability of aggregated relevant data will enable insurers to customise products, plan for micro segments and even individualise coverages.

  • Advisory excellence

Robo-advisors hold the potential to change the dynamics of insurance advisory dramatically by not only eliminating the drawbacks of human advisors but also assisting them to develop and hone their skills. This has the potential to act as a force multiplier to the existing distribution network and improve productivity. Robo-advisors also eliminate human bias and improve trust and confidence levels by providing consistent, rules-based advisory services at an affordable cost.

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  • Risk assessment

Underwriting systems will become smarter as they start leveraging the data being made available from external and internal sources. This, over a period of time, will cause a significant improvement in risk assessment and reduce the need for underwriter involvement for simpler risks.

  • Improved operational efficiency

AI-based systems offer a host of opportunities for the insurance industry to improve its operational efficiency. This can lead to reduced turnaround time, lower costs and improved productivity.

  • Maximised customer experience

With NLP, speech recognition and virtual assistants, insurers can embrace innovative ways of transforming the customer experience. With virtual assistants available at various touchpoints, insurers can take their customer service to greater heights by offering contextual and personalised products and solutions.

  • Competitive advantage

Insurers with AI capabilities can position themselves to handle market challenges better than their competitors in the ever-changing insurance business. By leveraging machine learning and the ability to read unstructured data, insurers can develop a real-time appreciation of prospects’ behavioural and demographic actions, recognise imperceptible changes in the market forces that dictate those changes and forecast optimal responses.

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New business models emerge

Traditional insurance business models are fast becoming obsolete in the new, hyper-connected world. Staying relevant means finding new ways to interact with customers and deliver value-added services. Insurers must assess their strengths to find the most viable model for the future – focusing on using technology to generate new revenue streams and create high-value interactions. Insurers who embrace AI-enabled technologies, understand their data sources and leverage them to create newer markets, personalise products, enhance customer delight, while increasing efficiencies, will be the winners.

This article first appeared on Asia Insurance Review
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