The insurance industry is known for its laborious paperwork. A day cannot pass without paperwork from insurance application to claims processing and reimbursement. The adverse effects of manual processing are delayed claim processing, errors, and disappointed customers. Here is the good news. McKinsey reports that by 2025, up to 50% of insurance claims will be automated. That is quite a massive number. Automated processes allow the insurance industry to cater to more customers and maintain better customer relationships. To reach that level of comfort, firms should adopt AI into their processes. While firms have started adopting AI in insurance industry in the form of chatbots, Apps, there is still a lot more scope for AI in this sector like digital workers/employees. If you still wonder, here are a few facts,
- Research shows that AI can remove 15% to 25% of reinsurance expenses which saves $5-10 billion per year.
- McKinsey says that 5% to 10% of the insurance claims are fraudulent.
- FBI estimates that the total cost of insurance fraud to be more than $40 billion annually.
AI in insurance redefines the whole process causing less process cycle time, more efficiency, and better customer experience. In this blog, you will witness how AI revolutionizes the insurance industry. First, let’s see where all you can incorporate AI into your process ecosystem. I am sure by the end of this blog; you will have your use case ready to explore AI more.
Business applications of AI in insurance:
Smart data management:
Insurance firms have tons of data and many other scattered management segments. This leads to confusion, data silos, data leakage, and data miss. Most of the Data they handle are confidential details of the customers, which need utmost security. So, to avoid any disasters, they can adopt a strategically built AI-powered environment. Now the information about business and customer interactions can flow from one specific department to another on a common platform without any chain breakers. Thus, insurance companies can elevate the quality of information management systems, improving compliance and data governance.
Automate claim process:
AI-based chatbots improve the claim process by removing excessive human intervention. They can receive the claim request, capture damage, update the system, and communicate with the customer. For instance, an AI-powered bot can review the claim, verify the policy details, and pass it through a fraud detection algorithm before requesting the bank to make the payment.
AI-powered bots can reduce labor costs for insurance companies while providing instant customer service. Furthermore, by detecting data patterns in claim reports, an AI-powered automated claim support system can protect businesses from costly fraudulent claims, human errors, and any damage.
Smart bots for better assistance:
Intelligent chatbots exceed human insurance agents. For a human-like understanding of customer queries, chatbots have NLP capabilities and sentiment analysis to assess a customer’s reaction and resolve issues accordingly.
Chatbots can do a lot more, starting with fundamental questions related to claims, like providing product suggestions, promotions, lead generation, or customer retention. Customers can type or use speech to communicate their concerns about different policies. Furthermore, you can integrate bots with multiple channels to assist customers.
Automate insurance underwriting:
McKinsey predicts that up to 30% of underwriting roles could be automated by 2030.
Every insurance policy has a specific requirement. For instance, health insurance requires the person’s complete medical history before opting for a policy. The policy and limit coverage is determined based on the health condition. In the health and auto insurance industries, fitness and vehicle tracking systems give rise to dynamic, intelligent underwriting algorithms that control how premiums are set. IoT and tracking devices record valuable data, which helps to determine insurance premiums upright and regulated.
Using Artificial Intelligence and Machine Learning, insurers can save a lot of time and resources involved in the underwriting process, tedious questions, and surveys, and automate the process. Insurance bots can investigate a customer’s overall economy and social profile to determine financial stability and risk factors. Because AI is more capable of scrutinizing gathered data, it can predict the amount of risk involved, protect businesses from fraud, and provide customers with justified insurance amounts.
Predictive Analytics to determine accurate policy:
Health insurance companies are developing incentive programs to encourage customers to care for their health. Companies can only invest in claim payment and management processes if their employees are healthy. Predictive Analytics can do more than predict customer preferences and tailor relevant products in the future.
AI predictive algorithms scan the previous year’s claim activity and hospitalization data to incentivize customers to improve their health and well-being. It reduces health risks and helps to utilize company resources better. As a result, today’s start-ups take advantage of AI’s unique ability to sift through mountains of claim data and coverage patterns to be more proactive and anticipate health risks at the individual level before they occur.
Strategic Marketing:
As part of a competitive market, insurance firms need a powerful marketing strategy, not just the traditional cold calling approach. Customers today look for highly personalized services. Agents in the insurance industry can gain access to a complete profile of customers and prospects by combining the power of predictive analytics, NLP, and AI. You can analyze this data further to generate mature insight and accurate predictions on customer preferences and provide suggestions.
Major business benefits of AI in insurance:
In the insurance industry, customer satisfaction depends on speed, customer engagement, and efficiency. Here are the major business benefits of AI in insurance.
Quickens Claim Settlement:
It is evident that AI can transform the insurance industry drastically. Reports show that 79% of insurance executives believe AI will revolutionize the data and interactions between insurers and customers. Customer delight is proportional to the speed of claim settlement. By increasing claim settlement speed, AI provides a competitive advantage and improves business performance.
Prevents fraudulent activities:
One significant area where AI technology can do wonders is fraud detection. You can use AI to process tons of paper information from policyholders, enabling digital information flow between insurers and hospitals. You can use a machine learning model to detect fraud, process hard copies, and digitize data. On the other side, predictive analytics can detect any suspicious activity comparing the current data with the historical data. Thus, prevents any fraudulent transactions. As more insurance companies implement automated services, the insurance industry will significantly shift toward offering more affordable and personalized services with better customer experience, efficiency, and accuracy. If you may ask how to increase the efficiency and accuracy of the insurance processes? Here is all you need – digital workforce/digital workers. They help you shorten your process cycle time, and speed up the claim processing while increasing your overall performance and efficiency.
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