8 AI Insurance Applications

Twenty years ago, “A.I. Artificial Intelligence,” directed by Steven Spielberg, was released in theatres. The film, which is loosely based on the 1969 short story “Supertoys Last All Summer Long” by Brian Aldiss, follows a robotic boy named David. He just so happens to be the first robot programmed to love.

At the time, artificial intelligence seemed reserved for science fiction. While not as advanced as David in “A.I.,” this technology has become a part of our daily lives. Some examples include virtual shopping assistants, Netflix recommendations, social media chatbots, and real-time GPS information. Digital assistants, such as Siri, Alexa, and Google, and robots like Roomba also rely on AI. 

Additionally, artificial intelligence has been embraced by businesses. Everything from delivering a more personalized customer experience to identifying top talent to predicting business processes is just several applications of AI in business. 

But, it’s also transforming the insurance industry. In fact, according to Statista, in 2016 “the global insurance industry spent 76 million U.S. dollars on software for cognitive/AI technologies.” That figure has skyrocketed in 2021 to over $571 million! 

Why have more insurers jumped on the AI bandwagon? Mainly because when AI is implemented, you’ll save time and money by replacing manual tasks with automation. McKinsey is reporting that 25% of the insurance industry will be automated in 2025. 

What’s more, AI delivers more data, which can drive more competitive pricing. You can also improve the customer experience. Both of these can make your agency or brokerage more profitable. Research from Juniper has found that technology, like chatbots, “will have a highly disruptive impact on insurance claims management, leading to cost savings of almost $1.3 billion by 2023, across motor, life, property, and health insurance, up from $300 million in 2019.”

But, that’s just scratching the surface. Let’s take a closer look at how AI is being primarily used in insurance.

1. Appeals Processing

Handling an appeal process can be tedious and frustrating for both you and your customers. Usually, this is because it involves the following manual process:

• An appeal or policy is submitted by a customer.
• The information that has been provided is then extracted. 
• The data is then recorded into various systems and routed to the right location. 

In some cases, this can take months. And, it may even take longer if the correct information hasn’t been provided., 

With the dynamic duo of AI and automation technologies, the appeals process can move much faster and require less human involvement. WorkFusion even proclaims that they can automate 89% of appeals processing with an impressive 99% accuracy rate.

2. Applications Processing

When a potential customer is applying to get insured, you need key pieces of information. Depending on the type of policy that they’re applying for, this could include personal information like their birthdate and state of residence. They also need to share the coverage amount they want, as well as the term of coverage. 

They also need to provide other pertinent information that’s specific to the policy. For example, if they were applying for life insurance, you’ll also require their gender, height, weight, health class, and if they use tobacco. 

On your end, this can be another laborious and manual task. And, if done over the phone, could result in human error, like inputting the wrong piece of information. 

With the assistance of document capture technologies, you can automatically extract application information to speed up the process. There will also be fewer mistakes. As a result, your prospective applicants will be satisfied with the quick turnaround.

3. Claim Fraud Protection

Did you know that about 4.61% of Americans have admitted lying to their insurer? That may not seem harmful. But, insurance fraud is estimated to be more than $40 billion per year. To offset these costs, insurers jack-up premiums — for the average American family, which comes out to between $400 to $700 annually. 

That’s a lose-lose for both insurers and customers. Thankfully, AI-powered predictive analytics and text analysis can spot fraudulent claims.

4. Claims Handling

As you’re well aware, insurance companies spend a small fortune, and a lot of time, on claims personal. Those case-solving costs are then passed off to customers through raising prices. Again, that’s a no-win scenario for either party. 

With AI, most of the time-consuming tasks involving claims and payouts can be automated. The technology may also be able to offer your customers customized contracts based on their unique situation.

5. Developing Policies and Pricing While Managing Risk

“The deluge of data an insurance company has at their disposal and the new ways they are soliciting it,” writes futurist Bernard Marr. One example is Progressive’s in-car monitoring system. When “installed gives the driver a discount on premiums while feeding the driving data to the algorithms or data from wearable devices that monitor activity levels and heart rate—can inform the type of policies individuals qualify for or recognize good behavior with discounts.” 

“By having a more complete picture of customers from a variety of sources, insurance companies can better manage risk and create products and services that serve their clients best,” adds Marr.

6. Document Creation

Creating documents for your customers is another task that you spend more time on than you would like on. And, it’s also another area that is easily prone to errors that further delay the process and upset customers. 

AI can also automate document creation to generate more policies in less time with fewer mistakes. In fact, solutions like TrustLayer use AI in order for brokers to offer live, verifiable proof of insurance.

7. Personalized Products and Policy Designs

“AI is well known for helping to recommend products and drive personalization on retail sites and customers have come to expect personalized experiences,” states the H2O team. “According to an Accenture study, more than 80% of insurance customers are looking for more personalized experiences.” 

“AI is equally well suited to recommend products and pricing in insurance. With AI models, insurance companies can determine which products and policy options are the best fit for a given consumer,” they add. “AI can also determine an individualized price based on consumer behavior and historical data. These recommendations can be used in web-based, call center, and agent selling scenarios.”

Furthermore, AI can also be used to offer niche policies to customers. For example, ZhongAn has created policies that insure against cracked mobile screens and shipping return products.

8. Responding to Customer Inquiries

Finally, AI is being used to greatly improve the customer experience. One example of this would be handling large call volumes. Rather than having your customers wait on the phone until the next available agent is available, chatbots and virtual assistants can answer common questions or direct them to the right agent. 

Also, chatbots can respond to customer inquiries 24/7 on your website or social media accounts. For more pressing requests, the bots can send them to the right agent and let the customer know that someone will respond to them as soon as possible.