Everything in the insurance industry, from product ideation to claims settlement, relies on data. With a CAGR of 5.30% in gross written premiums, the Indian insurance market volume is projected to reach $258.90 billion by 2028. Leveraging AI in insurance underwriting and claims can significantly enhance an insurance company’s capabilities to capture a larger pie of the world’s fastest-growing insurance market.
Insurance companies are already using AI to reinforce processes and offer innovative solutions to meet unique customer needs. While there are several applications of AI in insurance, underwriting and claims are two of the most important use cases. Here’s a look at these.
AI for Insurance Underwriting
The Indian insurance industry is rapidly evolving by embracing digitisation and support from increased consumer awareness. However, changing risk demographics, a rapidly expanding serviceable market, and disparate consumer requirements pose certain underwriting challenges.
Challenges in Insurance Underwriting
Maintaining quality of products across diverse serviceable segments, while reducing cost to customers
Inefficiencies in quoting and submission management systems
Offering innovative and valuable solutions that meet unique customer needs
Managing and harnessing the power of big data and integrating new information in the decision-making process
How Can AI Help?
AI enables businesses to tap into the massive potential offered by data. An insurance company can leverage this to make their processes more efficient, precise, and aligned with customer expectations. Deep analytics, predictive modelling, and anomaly detection play an instrumental role in improving operational efficiency and augmenting risk management.
Advanced AI replaces slower manual processes. For instance, managing databases in digital or physical form is cumbersome and prone to human error. It is also very time-consuming to detect and rectify inconsistencies. Automation significantly improves the quality of data management, while reducing the turnaround time.
Some InsurTech companies in India may offer smart underwriting solutions to insurance providers. The time saved by the underwriter can be allocated to conducting deeper risk evaluations. Advanced analytics leverage machine learning and NLP (natural language processing) to recognise patterns and identify correlations among massive datasets. AI tools generate multi-perspective and digestible reports that offer real-time insights. These insights help insurers to reduce costs, improve strategies, and respond quickly to the consumer’s changing needs.
Optimised insurance underwriting increases throughput, enhances customer experiences, and offers more accurate risk analysis.
Business Advantage
AI-powered automation helps underwriters make more informed decisions while reducing the administrative workload. AI-powered risk appetite analysis and risk scoring have proven to improve the accuracy of risk assessment and the efficacy of premium pricing. This also helps reduce the possibility of fraud.
Increased speed, accuracy, and efficiency of insurance underwriting allow insurers to focus on product innovation, customer satisfaction, and overall business growth. This enables insurers to serve a wider spectrum of clients with personalised and more affordable coverage.
AI for Claims Management
AI in insurance claims offers benefits in claims management:
Share Workload
Did you know that 40% of the inbound call volume for an insurer is policyholders checking the status of their claims? AI-enabled automated response systems can seamlessly take over the load from the customer claims team. This expedites query resolution and customer experience, while also saving the team’s time and energy for more value-generating and pressing tasks.
InsurTech companies in India offer AI-powered assistants for offering clients 24x7 access. Intelligent claims assessment processes leverage generative AI to review claims declarations, extract key details, identify missing or inaccurate information, and summarise the data for claims agents. Automated customer interactions, for notifying about the status, procuring missing information, and seeking details to remove inadequacies improves customer experience and response time.
Reduce Fraud
Fraudulent claims are the largest part of preventable losses for insurance companies. However, advancements in technology and novel techniques to defraud claims personnel have rendered traditional fraud detection and prevention mechanisms futile. This results in the erosion of trust and confidence of stakeholders, especially for high-velocity insurers. Therefore, 40% of insurance providers plan to prioritise AI to assess claims, while 20% of claim adjusters are extensively using the technology for fraud prevention.
Techniques like real-time monitoring, cross-checking claim information and reports, geospatial analysis, and image analysis enable AI claims assessment solutions to improve the accuracy of fraud detection and reduce false positives, while saving insurers time and money. Enhanced capabilities with NLP and deepfake detection further bolster fraud prevention capabilities.
A customer-experience-centred AI-powered automation in Poland improved claims accuracy by 10%. InsurTech companies in India can help achieve more significant gains with claims-focused AI solutions. AI tools are trained with baseline claims behaviour. These tools identify deviations, abnormal activities, subtle inaccuracies in clients’ claims, and behavioural or claims pattern anomalies, which facilitates fraud prevention. Early flagging of suspicious claims alerts insurers, and they can proactively investigate the claims to mitigate fraud.
Insurers Must Act Fast
Insurance companies need to hit the ground running with AI. As the insurance landscape of the country is evolving, competition is intensifying. While the industry is ripe for change, customers are also ready to embrace the value added by insurance. It is crucial to accelerate the delivery of cutting-edge services while managing risks. This requires deep experience and expertise in insurance technologies and AI. Collaborating with innovative InsurTech solutions providers can catalyse the transition of your insurance company and maximise ROI.
Talent Management is Crucial to AI Success
One of the most crucial aspects of incorporating AI across business processes is instilling a sense of collaboration instead of competition among team members. For instance, AI assistance for underwriting can significantly increase the pace of moving submitted applications. It can enhance the accuracy of risk analysis and optimise premiums in the best interests of the client and the insurance company. However, manual oversight to manage complex cases, handle exceptions, and ensure fair operations remains imperative. This can enhance the overall business ROI from AI, while also elevating the value proposition for customers.
Importance of Strategic Collaborations
AI-powered InsurTech solutions facilitate data ingestion, binding and enrichment to ensure triage, appetite fit, and quality scoring. However, they cannot replace humans. Moreover, the ethical use of AI in insurance and giving humans the power to override AI are essential. As AI solutions become increasingly sophisticated and their applications grow in the insurance industry, InsurTech solutions providers enable insurers to create collaborative business models. These models help to realise the value of technology faster.
Prioritise Customer Privacy and Data Security
While progress at scale is crucial for India’s insurers, exercising caution is imperative when implementing advanced solutions and novel technologies. Protecting sensitive client data and putting forth a resilient cyber posture are critical. Having stringent guardrails across AI and data management systems is non-negotiable in the increasingly data-reliant environment. Insurance companies must also ensure compliance with regional and national regulations without compromising on innovation or client satisfaction.
This is where the expertise of experienced and reliable InsurTech companies in India comes to the rescue. They enable insurance providers to improve efficiency and accuracy while making room for manual oversight to ensure that AI decisions remain ethical, fair, and unbiased. They facilitate balancing innovation with regulatory compliance, accessibility and security. Expert InsurTech providers are adept at ensuring transparency and equitability of AI decisioning.
Embracing AI in insurance can help you position your brand as a leader in delivering innovative services at scale while reducing fraud and simplifying operations. This translates into greater value for customers through faster and personalised solutions.
Bibliography (Last Accessed on August 26, 2024)
