Speaking of disruption by Deep Tech in the business sector, we often refer to the finance or manufacturing industry. When we talk about the insurance business, many may wonder how disruption can happen. Interestingly, nowadays, the insurance businesses are being enhanced by Deep Tech, especially by AI. Several companies have applied this technology and produced notable outcomes. Today, Digital Ventures will share about how AI can be applied to the insurance business.
Precise usage-based insurance by AI.
AI has the ability to manage data and help users view trends. Such trends can be used to evaluate risks in order to adjust the value and conditions of the insurance. Thus, this brought about a new pricing strategy called the usage-based insurance that is becoming popular among the assured for its low cost and conditions that match actual usage. For the insurance company, they are able to acquire precise data which enable them to save costs. Below is how AI is driving the usage-based insurance trend.
- Use IoT to collect consumer behavior data. We are aware that AI will work when there is sufficient data. Today’s technology, especially the Internet of Things, play a significant role in data collecting. The insurance company is able to offer products that will benefit the assured which will also provide the company with the necessary data for behavior evaluation. An example is a smartwatch that provides the users’ exercise information or a tool that analyzes the driving behavior. Then, the data can be sent to the insurance company for evaluation. This method not only provides the AI with sufficient data but also gives more precise information when compared to the conventional evaluation method like questionnaires.
- Calculate insurance rate according to the risk or actual usage. The collected data will be used to assess the insurance rate as well as the terms and conditions that better fits the consumer behavior. For instance, if the assured regularly exercise, the AI will consider that this costumer has a lower risk for certain sickness, so it will decrease the insurance rate accordingly. Conversely, if the data shows that the assured has a higher risk for certain illnesses, it may offer an insurance package that includes such symptoms.
- AI evaluation is cost-saving when compared to the conventional evaluation methods. Although technology has certain managing costs, when compared to the conventional evaluation method by a human, it is more cost-saving. Also, AI is capable of acquiring more data when compared to a human. Moreover, its processing time is faster with less bias, thus, it helps save managing costs which are the core cost of today’s insurance businesses.
Customer Experience: Creating new service experiences for customers.
Not only for management, but AI can also help with customer services. It can simultaneously facilitate both the assured and the insurance company.
- Smarter Chatbot with higher precision. In the past, we use Chatbots only to fill the gap in between services. Today, Chatbots are smarter with the help of AI. They are able to support various applications such as image recognition and understanding human language with NLP (Read more about NLP). Thus, insurance companies are using Chatbots in several applications from offering preliminary insurance contracts to 24 hours reply for emergency cases.
- Mass authenticate platform with the help of AI. Not only can AI communicate but they are applied to authentication when purchasing insurances. For instance, with China’s population over billions, a Chinese startup built a platform that offers online insurance called Zhong An. It uses machine learning and image recognition to authenticate users before purchasing using face recognition and for reading documents which customers can perform every process online. Today, this InsurTech startup serves over 429 million Chinese customers with its online solution.
A speedy and precise claiming process that saves management costs.
The insurance claiming process is the biggest concern both for the assured and insurance company as it is the process that risks having errors. Mistakes can occur in the operations wherein customers fail to receive insurance, or the company also risk fraud which could lead to further damage. AI can help enhance the following aspects:
- Speedy operations to receive insurance claims within 3 seconds. For the insurance business, the speed wherein customers receive their insurance claim is a distinctive indicator for the service quality. In the past, customers may have to wait for weeks or months to receive their insurance claim. Today, a USA-based insurance company called Lemonade has developed an AI to manage the claiming process and provide the insurance claim within 3 seconds. Thus, it has become a leading insurance company in the USA.
- Reduce operation errors. The insurance business involves numerous documents and conditions, thus, there is a high chance of human error. Therefore, an AI is helpful when it comes to precise document management. Also, as the AI process is digitalized, it helps to reduce the use of paper.
- Reduce damages from fault claims. The www.insurancefraud.org reports that insurance companies around the world are affected by fault claims at a total amount of 80 billion USD. The main reason derives from false documents used to acquire insurance claims. Companies need to seek security solutions and AI is a good option. This is because AI is capable of a non-stop and precise search for data abnormalities (read more about how AI is used for data security).
This wraps up the story of how AI applications can enhance the insurance business to satisfy both customers and service providers. Interestingly, several Deep Tech also has the potential to enrich various businesses. Follow Digital Ventures for more updates about Deep Tech and how it affects lives.
Reference: techemergence.com and insurancefraud.org