Impact of AI on the insurance value chain
ARTIFICIAL INTELLIGENCE (AI) has the potential to do a lot of exciting things, especially in a field like insurance that is complicated by default.
According to a recent Allianz study, there are many ways AI can positively impact the insurance supply chain, and their study urges insurers to start considering and evaluating their options soon.
“Current AI applications improve the insurance value chain by making it more effective in targeting customer needs appropriately, and more efficient in delivering value on time and at a lower cost,” the study found.
Here are some of the areas of insurance that benefit from existing applications of AI:
Unlike retail or manufacturing, insurance companies seldom interact with their customers – usually only when selling a policy or settling a claim.
Using AI can help manage customers and markets and bring policyholders significantly closer to the company.
Businesses could use AI to sort through and analyze customer data to create accurate customer profiles that support “appropriate” and “individualized” marketing campaigns.
Further, it can help insurers better understand the world around them so they can update their actuarial formulae and models to fine-tune their pricing and ensure that customers get the best prices without affecting margins.
My new insurer is AI powered and I'm saving about half; it even set a world record by paying the world's fastest claim in 3 seconds!
— Faisal Misle (@fmisle) October 8, 2017
AI can solve the biggest problem insurance companies have been grappling with for years: making sure customers understand their products, make the right choice, and know the impact of the product at different stages of their life and in different scenarios before they actually make the purchase.
If you’ve got a website, for example, or an executive at a bank with a tablet in their hand, you can deploy AI to interact with the customer, learn a few things about them by asking questions, and suggest the right policy for them.
You could also use AI to help the customer understand why the recommendation is most suitable amongst all the policies in your portfolio. It could truly revolutionize your interaction, and therefore your impression, on customers.
— Walter Jennings (@FacingChina) September 5, 2017
When purchasing a policy, it needs to be processed, screened and scrutinized by an insurance representative before it is submitted for underwriting.
Doing it manually, like traditional companies have been doing it, takes several days. However, using AI can make it more seamless and easy.
AI allows for the automatic processing of orders by performing various types of data-checking and fact-checking, such as fraud detection and credit analysis.
As a result, you’re able to improve the customer experience – in a world where everyone wants everything instantly.
According to Allianz, when an insurance policy is in-force, chatbots can assist customers on a 24/7 basis.
And since customers won’t need to wait too long on a call or spend time in a kiosk or office discussing their policy, you’ll hear more from them – about their expectations, challenges, and their lives – all of which can provide insights for new products you develop.
Moreover, policy adjustments such as portfolio diversification and risk profiling can be automatically performed by AI-based algorithms – lifting off a load from your executives and giving them more time to build relationships with your customers.
Underwriting and claims
Finally, and most importantly, AI can play an important role in underwriting policies and help you manage the risks of being in the business.
Since it can compute quickly and accurately, using piles and piles of data on the economy, health records, earnings, spending records, and other data – not only on a national level but at the city-level or district-level can really drill down on who should be charged what for a certain kind of insurance.
The right price is always the best price – and AI can help you deliver that with more precision.
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