Every day, technology is advancing, influencing businesses ranging from retail to manufacturing and even insurance. It is clear that technologies such as artificial intelligence (AI), blockchain, and machine learning have the potential to revolutionize the future of business as well as the way people work and live.
These new technologies are already being used in the insurance and actuarial professions. Some insurance companies utilize AI to automate critical aspects of the claims handling process and improve customer experience. It also aids in securing transactions, detecting insurance fraud, preventing risk, and potentially lowering the cost of a policy.
AI is picking pace and establishing itself more thoroughly, making the insurance and actuarial sector more efficient, accurate, and secure. As AI continues to be adopted, insurance companies and actuarial firms — from auto insurers to homeowners and life insurers and customers alike, are experiencing various benefits.
AI can interpret data and apply its learnings to a wide variety of functions. AI is being utilized in various industries such as healthcare, education, finance, e-commerce, and human resources. In general, most businesses that employ AI do so to improve their business processes, efficiency and solve problems faster.
In recent years, the insurance and actuarial sector has begun to use Artificial Intelligence and related processes in business operations. And, because the insurance sector is so diverse, the applications of AI and machine learning are almost endless.
Artificial Intelligence, Insurance Industry and Actuarial Professions
According to a Juniper Research study, it is estimated that AI will drive insurance costs up to $2.3 billion by 2024. AI has the potential to impact the insurance industry and actuarial professions in multiple ways. Its most apparent applications include claims processing, underwriting, fraud detection, and customer service. The actuarial arm of insurance is especially poised for continuous AI disruption because it has always been about model-building – which is precisely the function that artificial intelligence and its subset, machine learning, automates, iterates, and optimizes.
According to an Accenture technological report of 2017, insurers have begun to use AI technologies as a tool to help improve overall customer experience, with the technology improving the way sales and services are executed, allowing for faster claims processing, and enabling more accurate individual risk-based underwriting processes.
When asked about the advantages of incorporating AI into their interfaces, more than half of the insurance executives surveyed in the Accenture report cited improved data analysis and insight. The quantity of data combined with unstructured data may be utilized to promote customer engagement, generate more personalized service and more meaningful marketing communications, sell the right product to the right consumer, and effectively target the relevant customer.
Artificial Intelligence can improve dozens of processes substantially, and more and more insurance companies are implementing the technology across their organizations. Pricing, claims handling, and fraud detection is the most notable applications that benefit the most from AI.
The pay and reported loss patterns are one area where actuarial professions can observe significant changes with Artificial Intelligence. Actuaries usually examine a company's previous experience at various assessment points and try to predict how new losses emerge based on these identified patterns. If the closing rates of demands have been drastically modified, the past assessment points could be less predictive. With AI technology, actuarial decision-making will be at the forefront of companies. Take, for example, London-based Insurtech Cytora, which sifts through massive amounts of web-based commercial property data to assign "risk scores" on an address-by-address basis.