5 Ways AI Will Change the Insurance Industry
This is a writing sample from Scripted writer Josh Wallman
Do You Buy Used or New? The Difference in Insurance Cost Can Be Significant.
Whether you are just starting out trying to decide whether to buy a new or used car or retiring and deciding between the new or used motorhome or boat for your hobby, not only are the choices endless but the insurance costs of those decisions vary tremendously as well. What type of car or boat? Where to buy it? What do you want on it? What shape is it in? What color? You know, the basics. Isn't that how you look for a car these days online? That search could take hours or days if performed by a human, but not quite that long if performed by a machine using Machine or Artificial Intelligence (AI). Insurance companies use that same intelligence to evaluate all possible scenarios. Why would they do that? To save them and you a tone of money. That search is so fast that it saves your agent a ton of time on research and you a ton of money in the end. Knowing it will save you that much money tells the agent you are likely to a consistent customer of theirs. That is why they invest in the intelligence.
But AI is not new. Detroit has been using it for years to make your cars, Google since it opened. But the technology is now spreading to all industries. Guess which one is next? Insurance according to an Oxford study. That is why 75% of industry executives expect AI to change the insurance industry for the better very soon. But that isn't the half of it!
So What is it? A Brief Introduction to AI.
AI is a little computer code in the smallest of devices that is programmed to do what takes humans twice as long. And it never sleeps. That's it. The FitBit on your wrist keeping track of your steps, your heart rate, your weight, your next appointment and that anniversary that is coming up fast on the outside. It is everywhere, from your laptop to your espresso machine. And now insurance companies are using it to reduce the cost of finding you the best deal. Here are a few examples.
How AI Impacts the Insurance Industry Now. App-City.
1st Claims. Ever gone on a vacation after sending in a claim only to find the claim still unresolved when you return? Human processed claims can take as long as 11 days according to a JD Power and Associates property claims study. That will soon be yesterday's issue. AI apps will shorten that time frame severely.
2nd Marketing. Yesterday, you would be cold-called by an insurance agent who had very little knowledge of your life or interests. Today, AI apps provide that agent with more personalized information about you. That cold-call is now far warmer.
3rd Underwriting. Yesterday, this took weeks and likely had errors from mistakes to typos. Today, with AI, it can be done in hours and is accurate.
4th Data. Data. Data. This is where the largest impact is in the business. Insurance companies have plenty of it, but must scour it all to find the patterns that help you the most. Using people to do that takes weeks. Using AI reduces that to hours.
5th Chat-Bots. We all use chat-bots all the time. They are used by insurance companies to onboard consumers, find correct policies, and check fraudulent claims rather than the agent spending their time on that. And most consumers prefer chatting to talking on the phone. 'AI bots will power 95% of all customer service interactions by the year 2025.'--Servion
Go bots go!
Catching Fraud.
So how many times did your bank call you this month to check on a charge made on your credit card? Well, insurance fraud dwarfs credit card fraud. Remember how slow the claim issue above was? That was due to humans processing your claim. According to Experian, human handled claims average 55% error with an additional 32% tacked on by simple typos. That's an 87% error rate. Artificially intelligent apps don't make those type of errors.
Reducing Underwriting Time.
Talk about error-prone and delayed! With an 87% error rate in claims, how often do you think you get the right policy? This alone is worth the investment.
How Will AI Impact The Insurance Industry?
AI impacts all areas of insurance, and according to Buffet, that could be a boon for consumers and the bane of insurance companies.
"If driverless trucks became pervasive, it would only be because they are safer," ... "and that would drive down the premium income of Geico. If they make the world safer, it's going to be a very good thing, but it won't be a good thing for auto insurers."
So this transition is most definitely in your favor.
Here is another whopper. According to the Financial Times and others, the biggest change that AI will bring is that you may not need an agent to see you to determine what policy you get. AI facial recognition is improving so quickly that all you may need to do is stare at an online app that will read your face, skin, teeth, and eyes to be able to diagnose your general health. No skin prick, blood or urine sample. If that were to happen, the cost would drop so severely that you might get a policy for the price of bubblegum. How do you like 'dem apples?
Insurance Companies are Adopting AI at an Exponential Rate
In 2018, your insurance agent expects to use AI most of the time. On top of that, 62% of agencies will be using it expressly for that purpose and that 62 % will see a 39% rise in their revenue next year. Why wouldn't they? They find their customers the best policy that fits their needs at the lowest possible premium in the shortest possible time. That's a win for everyone involved.
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