Two words that are on the minds of every executive and worker in various industries are machine learning and artificial intelligence.
Everyone is wondering how these technologies will revolutionize their industry. In truth, artificial intelligence (AI) and machine learning have already transformed a lot of industries.
One such industry under transformation is insurance. In fact, over 75% of insurance executives believe that AI will transform insurance for good. We will look at some ways by which AI and Machine Learning are revolutionizing the insurance industry and recommend ways to stay ahead of these transformations. However, let us first look at what machine learning and AI really are.
What is Machine Learning and AI?
Machine Learning is the process of using statistical and mathematical techniques to give machines or computers the ability to learn from data without being directly programmed. This means that machine learning allows computers to understand trends and perform sophisticated analysis on data, all leading to the making of profitable inference. Artificial intelligence is simply the process of giving machines or computers the ability to perform intelligent tasks that normally require humans.
How will Machine Learning and AI transform the Insurance Industry?
There are several ways by which these two technologies are transforming insurance. Some of them are explained below:
- Reducing Fraudulent Claims: Over 35% of insurance companies have revealed that 5-10% of their annual claims are fraudulent, costing them billions of dollars. Machine Learning can help reduce fraudulent claims with the use of advanced fraud detection and anomaly detection algorithms.
- Personalization of Insurance Offerings: This is a key area where machine learning and artificial intelligence can greatly transform the industry. Insurance companies have access to a lot of customer data and, with companies like Duck Creek Technologies and their specialty partners like, Penguin.Tech, can provide custom offers based on the analysis of such data. Property and casualty (P&C) insurance software armed with advanced analytics can help in this personalization. This advanced P&C insurance software will reduce the total insurance cost of customers and endear them to the company.
- Faster Claims Processing: Claims processing in insurance usually takes between 10-20 days. With artificial intelligence automating the process, it can be reduced to as little as 24-48 hours.
- Advanced and Improved Marketing: Marketing is one area insurance companies have not really thrived in. The growing opportunity with artificial intelligence for P&C insurance software technologies is for firms to have the ability to offer personalized and better targeted advertisements at potential and existing customers.
- Advanced Risk Management: Insurance thrives on risk, so the accurate assessment and analysis of risk is important to any firm. With the advanced statistical and probabilistic techniques used by machine learning, risk can be better analyzed by insurance firms.
How to Stay Ahead of the Curve
Now that we know the ways by which these technologies will transform insurance, how does one stay ahead of the curve and benefits from these transformations? There are several ways:
- Embrace Technology and Analytics: In order to stay ahead of the impending disruption, it is essential that insurance companies embrace technology and make it central to their operations. Some offerings like Penguin.Tech’s API Kayak with a robust microservices API and the ACORD-based messaging will help enhance property and casualty insurance products and offerings.
- Data First Approach: Every decision to be made, no matter how little, should be hinged on data. This will ensure that trends and predictive possibilities are well accounted for in business.
- Data-Enhances Customer Relationship: The customer is the king of every business. Hence, it is important to create a lasting and solid relationship with insurance customers. Insurance companies have a lot of customer data and this should be used to better understand them and anticipate their needs.
There is no doubt that Insurance is one of the most important industries in the world. As such, this makes it very prone to disruption as the competition for solutions saturate the environment. However, the disruption serves as a window of opportunity and should not be seen as doom.
There is a lot of potential to harness in this industry, which an Ernst and Young (EY) report has estimated to grow by 4%, with an annual income growth of 28% between now and 2019.
