5 ways AI is revolutionizing insurance

Transforming the insurance value chain

By embracing AI and data analytics, there is a huge opportunity for traditional insurers to advance nearly every aspect of the insurance value chain. McKinsey predicts that the future of insurance will be full of utopian technology, such as self-driving cars, personal AI assistants, drones and more. However, it’s worth noting that advanced technology is already impacting most aspects of the insurance value chain, especially distribution, claims, underwriting and security.
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Distribution

Distribution is no longer the preserve of traditional insurers. In the midst of the digital revolution, insurtechs have emerged to provide digital businesses with the ability to embed protections directly into customers’ purchase journeys, whether booking a flight with a favorite airline or purchasing goods from an e-commerce retailer. Today’s customers, especially digital natives accustomed to customized online experiences, are looking for convenient ways to protect their purchases at institutions they trust. In fact, research by Cover Genius and PYMNTS shows that 70% of digital banking customers are highly receptive to receiving bank-embedded offers, with convenience being the main driver.

Digital institutions such as retailers, airlines and banks have a unique opportunity to enter the insurance world to provide consumers with the protection they desire, with the added bonus of an additional revenue stream. However, companies need to have the relevant technology to deliver the right products to the right customers at the right time. Insurtech brings a technology-led focus to capability with the ability to distribute insurance products across all verticals and leverage AI and machine learning programs to create personalized products.
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claims

No more hours on hold, or weeks of waiting to hear back about a claim. The claims experience becomes more efficient with process automation and AI that reduces end-to-end claims handling time and provides better experiences for customers. For example, Insurtechs streamline the claims process through APIs that leverage AI and data analytics to automate business rules and customer communications and integrate with external services. APIs can also distribute instant payments in any currency, solving one of the biggest pain points in the claims experience: long wait times. Claims no longer have to be something customers fear, with the help of AI and automation technology that greatly simplifies the process.
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to ensure

As insurance scenarios become more complex and nuanced, insurers have invested in technology to expand and streamline their underwriting capabilities. AI and data analytics can aid the adoption process to identify risk exposure quickly and accurately. Traditionally, underwriting has been a time-consuming, manual and labor-intensive process for insurers, but using automation technology can reduce this process to minutes or seconds. As we enter an era of more complex insurance scenarios, AI and data analytics will be imperative to help companies evaluate risk effectively and quickly.
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Cybersecurity

In the traditional insurance value chain, AI and data analytics can be used to detect suspicious behavior and detect insurance fraud, one of the industry’s biggest concerns and costs. Fraudulent claims are becoming more common, but AI and NLP technology can be used to spot suspicious behavior and catch bad guys early.

In addition, as customers spend more time on cyber insurance online, it is becoming an increasingly common offering for digital businesses and insurers. By leveraging AI and data analytics, digital companies can offer relevant cyber insurance policies directly to customers in the purchase journey. This will help provide customers with a new line of insurance that protects against identity theft, financial loss and other dangers of cyber-attacks.
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When many people think of insurance, they don’t necessarily think of an industry that is user-friendly, intuitive, or easy to navigate.

Traditional insurers have been slow to overcome regulatory hurdles and adopt technology that can help them deliver smarter, faster and safer solutions. From the consumer’s point of view, it is difficult to figure out which insurance will provide the necessary protection while still being cost effective.

But this is all changing. Research from McKinsey suggests that the insurance industry is on the cusp of a seismic shift driven by the adoption of advanced technologies. Artificial intelligence (AI) and data analytics have the potential to revolutionize all aspects of the current insurance value chain, enabling carriers to deliver hyper-relevant protections directly to customers.

The slideshow above illustrates five of the ways advanced technology is revolutionizing the insurance value chain.

The road ahead of us

The insurance industry is hampered by outdated processes, regulations and a fear of moving away from the way things have always been done. However, recent research from Deloitte shows that insurers across the board are spending more on emerging technology and AI to bring insurance into the modern, digital age.

While there is a dramatic evolution ahead for the traditional insurance value chain, there is also a new opportunity for digital companies to offer protection directly in their platform, introducing a range of new players to the insurance industry.

Darcy Shapiro is Chief Operating Officer for the Americas at Cover Genius, the embedded insurance insurtech protecting the global customers of the world’s largest digital companies.

Also by this contributor: Building reassurance for travelers with built-in insurance

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