Over the years, insurance companies have evolved to improve their offer, increasing margins and not giving way to the new realities of Insuretech that slowly, but surely, are gaining more and more market share. Today more than ever, they have to meet the new needs of digital consumers to purchase a value-added service, expressed in clear and transparent terms, personalized, easy to subscribe to and satisfying an immediate need for protection. As a result, there is a growing need for innovative technologies such as Intelligent Automation, Big Data, Artificial Intelligence and Machine Learning.
Insurance, the role of AI. A research
As highlighted by the Report “The impact of innovation on the organizational model of insurance companies” – published at the beginning of 2021 by EY and IIA (Italian Insurtech Association) – the contingent scenario necessarily entails a paradigm shift, i.e. an effective model for the diffusion of internal innovation at all organizational levels.
The report has involved realities of different nature (insurance and reinsurance companies, intermediaries, MGA and bancassurance) to obtain an analysis of the italian insurance sector in this phase of technological innovation and digital transformation. The report showed how the various insurance players, to continue to be competitive, will have to redesign their business models. Among the fundamental conditions to evolve in the right direction we certainly find the creation of digital skills, the proper management of innovative projects at all levels of the organization and careful monitoring of technology.
During the pandemic, the relationship between insurance companies and their customers has changed. According to the report, 79% of customers communicated with their insurance company through digital channels (i.e. contact centres, chatbots and video chat tools), while the remaining 21% relied on telephone contact. On the other hand, only 29% of respondents felt that the number of online subscriptions was unchanged, while for 43% of them there was limited growth (less than 10%). Another interesting aspect is that the pandemic has led the insurance industry to create innovative products that take account of new customer needs: 69% of companies have already launched ad hoc products to deal with the emergency and customer demands.
Insurance, the role of AI. The importance of the database
To implement this change, while remaining competitive and increasing efficiency, insurance companies are beginning to understand the importance of collecting and using data, as well as managing it with the support of AI. In today’s landscape, it is crucial to put the customer at the centre of processes as well as having different touchpoints through an easy and immediate purchasing process. AI offers insurance companies the technology necessary to revise the process of interaction with consumers, improving it in several aspects.
Insurance, the role of AI. The main areas involved
The first aspect on which innovative techniques can help insurance companies in the underwriting of new policies. Through the data analysis, it is possible to identify the needs and requirements of each customer, suggesting the offer most able to meet their needs. In the first phase, it is possible to analyze the behaviours and the policies already subscribed by the users to have a wide knowledge of the customers, to support the insurance intermediary in the negotiation phase. Moreover, once the need has been identified, it is possible to offer personalized micro-policies, purchasing them directly online in a few clicks with a price suggested in real-time, also thanks to the use of AI. In recent years, the range of instant policies underwritten only at the moment of need, customizable both in terms of duration and subject matter, such as those relating to accidents and travel, has expanded in this direction.
The next step after underwriting is the claims process. Artificial intelligence can be a key ally in speeding up both claims handling and automating damage estimation. Taking an example of claims involving cars, some companies have introduced chatbots that allow them to input all documentation and images related to claims, greatly reducing the timeframe of the file. Moreover, by going to model image analysis algorithms, it is possible to process the received files providing immediate estimates about the damages incurred. These algorithms, which help predict costs and timing of claims, lead to a significant reduction in the time it takes to settle claims.
Another strategically relevant field for insurance companies is fraud detection and management, which has traditionally been done by dedicated analysts with an onerous process from the perspective of resources used. With artificial intelligence, through advanced models, it is possible to identify suspicious cases, making the anti-fraud process automatic and efficient.
Insurance, the role of AI between speed and error reductio
The cases seen above are just a few examples to demonstrate how new technologies can be inserted in all functions of an insurance company the possible fields of application of AI are many and through an increasing number of data sources it is possible to improve the quality of algorithms to increase marginality and reduce time and costs through greater efficiency of processes.