We had come a long way when a pound of flesh was demanded against delayed loan repayments. Nevertheless, mentions of the importance of insurance as a guarantee against money loaned were already there in the ancient texts. Commercial Insurance stemmed from the need to protect commerce, business, and trade.
With the advent of new technologies, financial lenders are opting for Automation and Artificial Intelligence in Insurance to stay competitive.
Here, we will explore everything we need to know about AI Insurance.
As per experts, Artificial Intelligence has the potential to drive up to a whopping $1.1 trillion in annual value for the entire insurance industry. Like human intelligence, AI is evolving continuously, and it won’t be long before we see a change in dominance of its use cases from ‘detect and repair’ to ‘predict and prevent.’
Presently, most Artificial Intelligence Insurance use cases are centered around automating back-end administrative tasks. But, if we take an eagle-eye view of the future of insurance, especially commercial insurance, there is an entire area of unexplored opportunities. Since this sector lags in AI adoption, as compared to others, AI plays and will play a dominant role in the quest for complete digital transformation.
Here is the list of commercial insurance areas where Artificial Intelligence and Automation can bring a competitive difference:
Below are a few benefits of AI in Commercial Insurance:
According to experts, insurers have no alternative if they wish to remain competitive and transparent. Unfortunately, the sector is slow in adopting the technological shift. In order to realize the full potential of digitization and Automation, there are roadblocks to overcome, such as navigating complex legacy system landscapes with unlinked datasets in sales, managing insurance applications and claims processes, and addressing anti-selection risks from overly generalized automated solutions and severe regulatory obstacles.
AI insurance is not a relatively new concept. A handful of early adopters have applied this AI in the following use cases and are currently reaping the benefits of processes transformation.
Streamlining Claims Processing: Largely paper-based claims management processes eat up 80% of premium revenues and are most prone to human errors. Such inefficiencies and delays only add to the insurer’s operating costs. Artificial Intelligence in Insurance, coupled with Deep and Machine Learning, RPA, and IoT, can address the time, cost, and labor-intensive tasks, making them more efficient, thereby reducing the operating costs for insurers.
Accelerated Claims Adjudication: Both insurance providers and customers expect fast insurance cycle time. AI Insurance can quickly speed up the entire process by taking up most labor-heavy and dangerous inspection tasks from human resources.
Rapid Document Digitization: Legacy insurers largely depended on paper-based, print documents. Manually re-typing information is cost, time, and labor-intensive. With Document AI, rendering every pixel accurately became easy, and translating them into digital inputs is a piece of cake. Experts suggest that Automation of documentation can drive up to 80% in cost savings for every process.
Faster Underwriting: The insurance sector has become more intricate; hence rule-based underwriting and risk engines no longer suffice accurate estimates. Technologies such as AI, Automation, and Computer Vision paired with IoT devices help insurers record the asset state of underwriting in real-time and make adjustments as and when needed.
Fraud Detection and Prevention: Big insurance companies lose billions of dollars annually to fraudsters. AI document processing provides valuable intel to analysts for addressing various shortcomings of earlier applications and detecting anomalies before they compound into significant losses.
While commercial insurance may be more traditional, the winds of change are being felt even in this area of insurance. It is only about time before we see a full-scale digital transition in the said sector, all courtesy of Artificial Intelligence and Automation.
Unfortunately, AI Insurance is still at its nascent stage but not for too long!
The commercial insurance space presents ample scope for AI and other new-age technologies to foster profound change. From engaging a prospect and assessing risk factors during underwriting to settling claims and retaining customers, the sustainability of an insurance enterprise demands accuracy and efficiency across the value chain.