The impact of artificial intelligence (AI) in the insurance industry has been significant in the past five years. According to Accenture, the adoption of AI in the insurance sector is expected to double in the next three years. It could lead to cost savings of up to $1.2 billion annually.
Another study by PwC found that 63% of insurance companies have already implemented or are planning to implement AI in their business operations. As a result, AI has allowed insurance companies to improve customer experience, reduce costs, and streamline underwriting processes, leading to a more efficient and profitable industry.
What Is AI in Insurance?
Artificial intelligence (AI) in insurance refers to using advanced technology, such as machine learning, natural language processing, and computer vision, to automate and optimise various functions in the insurance industry.
This includes underwriting, claims processing, fraud detection, and customer service. By leveraging AI, insurance companies can analyse vast amounts of data, make predictions, and provide personalised services to customers in real-time. The integration of AI has the potential to transform the insurance industry by improving efficiency, reducing costs, and enhancing the customer experience.
Why Does Insurance Need AI?
There are several reasons why the insurance industry needs AI in 2023 and beyond:
Increased efficiency and cost savings: AI can automate manual processes and help insurers analyse large amounts of data quickly and accurately, leading to faster decision-making and cost savings.
Improved customer experience: AI can provide personalised recommendations and real-time support to customers, helping insurance companies meet their evolving needs and preferences.
Enhanced risk assessment: AI can analyse historical data and other relevant information to identify and assess risk factors, helping insurers make more informed decisions.
Fraud detection: AI can help insurers detect fraudulent activities by analysing patterns and anomalies in data, reducing the risk of financial losses.
Better decision-making: AI can provide actionable insights to insurance companies, helping them make more informed decisions and improve their operations.
Given AI’s numerous benefits, it is likely that the insurance industry will continue to adopt and integrate this technology in the coming years. This article will examine some of these areas in more detail.
The Challenge for Legacy Insurers
Legacy insurers must invest in AI to keep up with fintech start-ups because these start-ups often have a technology-first approach and can offer innovative, personalised services to customers in real time. AI can help legacy insurers automate manual processes, provide better customer experiences, and make more informed decisions, allowing them to compete with fintech start-ups and remain relevant in the market.
An example of a legacy insurer investing in AI is AXA, one of the world’s leading insurance companies. AXA has integrated AI into its operations, using machine learning to automate manual processes, improve risk assessment, and provide personalised recommendations to customers.
Another example is Allianz, which has invested in AI to enhance its underwriting processes and improve its efficiency. These companies recognise the importance of AI in staying competitive and relevant in the market and are taking steps to integrate this technology into their operations.
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