Much has been said about Artificial Intelligence (AI) and its potential threat to replace humans altogether. While it looks like a distant event as of now, insurance industry stands out in the way it is opening up to potential of AI.
Before delving further, let us consider the fundamental difference between human intelligence and artificial intelligence. While human intelligence is mainly based on behavior or mental thinking basis past experience, AI is almost the same with the key differentiator that this behavior is aided by a computing device. For instance conventional way of processing car insurance claims in event of accident will be to submit claim with the insurance service provider, surveyor being appointed by insurance company to inspect damage intensity and then the surveyor filing the report for the claims team to analyze it. In many ways it is time consuming as well as requires considerable number of human interventions as well as resources.
Compare this scenario with one where AI is leveraged for automating the claims process. Upon accident, the insuree is empowered to himself or herself take visual record of the damage, upload it on the user interface/app of the insurance service provider and then seat back and relax for the claims team to analyze the video. On backend the AI engine scans through the algorithm and basis analysis with historical visual records, determines the intensity as well as severity of the damage. It is then further analyzed with the historical claims data where the AI engine predicts the indicative claim amount and if the claim is within a limit, it is instantly approved else in some cases manual analysis is resorted.
The entire process is hassle free and at the same time foolproof as well.
Effectively, leveraging AI has the potential to address two pertinent age-old challenges plaguing the insurance industry – namely the time consuming process related to claims and potential threat of collusions between surveyor as well as insuree that lead to fraudulent claims.
Global research and consulting firm, McKinsey in its detailed study of potential of AI to usher in massive disruptions to the insurance industry, presents the role of AI, ML and deep learning as elements that will drive the future of insurance industry. It spells out how the use of AI will extend to encapsulate multiple buckets of insurance services value chain. According to the study, more than 50 percent of claims processing will be handled by automated systems fueled by AI. It predicts use of drones as well as IoT to further sharpen the insurance services value chain.
Eventually the use of AI in the immediate years is expected to help claims organizations adopt a more proactive mindset and step up their focus on risk monitoring, prevention as well as mitigation.
The pandemic times has resulted in the new decade to be termed as decade of reimagination wherein conventional age-old way of doing business will rapidly be taken over by sophisticated and intelligent new-age approaches that will be driven by digital technologies of the future. AI is one such core disruptive technology growth bet that has the potential to transform insurance industry and enable it to reach a new high. In many ways, insurance players face an inflection point where they stand to immensely benefit by migrating to digital ecosystem and if not then will be left behind to survive in the increasingly competitive landscape. The onus is on the industry that safeguards others to be ‘insured’ itself.
The article has been written by Abhishek Rungta, Founder and CEO, INT