Transforming claims and underwriting with AI
Insurers have a lot of structured and unstructured data to deal with, provided by internet of things devices, vehicle telematic devices, third party databases and customer interactions. Nw, surfers must find a way to make data work for them using the latest technologies.
Luckily we have AI and cloud technology to help with that. They can help enhance efficiency in the underwriting process and deliver faster, customized customer experience. This article shows the areas AI can improve in underwriting for a smoother experience.
The AI transformation
The aging workforce is a current problem in the insurance industry. This trend is most prominent in life insurance and property underwriting. According to the e US Bureau of Labor, 50% of the workforce will retire in the next 15 years, which leaves 400,000 open positions.
Replacing the employees isn't as straightforward. However, companies must be aware that AI has experienced significant development and isn't the same as it was five years ago. Significant investments in this technology have been made, enhancing the capabilities of using claims data and improving the underwriting process. Companies that use machine learning and AI as the primary source enhanced their investment by 20% during the period from 2015 to 2020. According to a survey conducted by Accenture, many insurers stated that AI is a priority for their company. However, less than half of them stated their companies leverage this technology. The struggle is to implement AI in a way that helps insurers remain competitive.
Customer interactions
Which are the main factors crucial for customers to stay with an insurer? They state that the main reasons are service experience, price, and coverage. However, there is another problem going on. The customers who pick the policy according to the price won't understand what's covered or what to expect in the process. Which results in dissatisfaction.
A third of the claimants stated that they weren't happy with their claims experience. This is where AI can help by speeding up the processing. It can help with digital and self-service claims processing for a better customer experience. Some of the AI methods that can help with this are chatbot, guided scripting for the agents, and rich text messaging.
Efficient underwriting process
About 40% of the underwriter's time is spent on the manual tasks such as completing the administrative work. According to an estimation, this leads to a loss of up to $160 billion during the next five years. AI-powered underwriting overtakes the administrative tasks, meaning that the employees will spend less time on them. Also, the possibility of error is reduced when you eliminate the manual processes.
AI and human input
While leveraging AI becomes a strong base for improvement, insurers shouldn't forget about the human input. Incorporating the best of the two sets the foundation for success. Humans needs to work together with AI to modify the decisions.
Also, they shouldn't underestimate the ethical and regulatory implications of using AI. Humans must test AI to avoid any biases that propagate socio-economic, gender, or racial disparities. We can take Loop as an example of the right implementation. This insuretech relies on the driver behavior and location data to set the pricing, rather than relying on credit score and marital status. AI steps in to create quotes based on individual customer needs.
Final take
Insurers need to implement the latest technologies to provide smooth customer experience. Many of them are already leveraging AI to gain a competitive edge, and others should follow suit.