In 2017, an insurance technology start-up named Lemonade received a claim, verified it against its files, examined it for fraud, pronounced it valid, and paid the claim. All of these operations were done in three seconds. People were more than amazed.
Everything about it seemed contrary to the popular conception of how insurance companies work, which is eagerly take in money and then only reluctantly pay it out. But this is now the new world in insurance, where artificial intelligence (AI), machine learning, and data analytics will not only make insurance firms more profitable but also deliver better customer service.
That’s according to a new report from consulting giant Deloitte.
AI and machine learning have well-defined strengths in image and voice recognition, in natural language processing, and in the deployment of chatbots.
These strengths will transform the insurance industry in the following manner:
- Chatbots will become the primary means of communicating with the customer base and the public. Staffing costs could be trimmed as AI-powered chatbots will be able to provide answers to the questions of existing and prospective customers. These chatbots can also explain the ins and outs of policies and guide clients in their acquisition. They will also never be absent and none of them will ever face a client after having a bad day.
- Claims will be processed faster. By eliminating human intervention in all but the stickiest of cases, staffing costs can again be reduced and clients made happy which will be good for return business.
- Predictive analytics will identify problematic sector of the client base and suggest remediation efforts that will cut claims in the long run.
- Premiums can now be dynamically priced as real-time monitoring of the clients can now be mounted. Low-risk behavior and activities can be used as data points for reducing premiums while high-risk behaviors and activities will have the opposite effect. This will eventually lead to the mass customization of premium schedules
Here is an excerpt from Deloitte’s 2018 Insurance Industry Outlook:
Robotic process automation (RPA) and cognitive intelligence (CI) technologies are fast-becoming a reality, given rapid increases in computing power and decreases in data storage costs. These options give insurers an opportunity not just to reduce expenses, but also to possibly reinvent how they conduct business.
RPA gives carriers the ability to automate mundane, box-checking-type tasks in underwriting, policy administration, and claims, potentially freeing up thousands of people hours. RPA solutions use bots to mimic the way individuals interact with applications and follow simple rules to make decisions and automate routine business processes, improving efficiency without the need of any fundamental process redesign.
CI goes one step further by providing insurers with tools to automate non-routine tasks requiring soft skills, such as intuition, creativity, and problem-solving. This is primarily driven by the refinement in several key CI technologies, such as handwriting recognition; image, audio, and video analytics; and natural language processing.
In the meantime, cognitive technologies, combined with RPA and advanced analytics, can improve productivity of existing staff performing non-routine tasks—or could automate those tasks entirely. The potential benefits of RPA and CI go beyond cost reduction to offer decreased cycle times, flexibility and scalability, improved accuracy, and higher employee morale—at least among those who can make the transition.