Impact of Artificial Intelligence on Insurance Industry

At the RiskMinds Insurance convention, Tony Young, National Clinical Director for Innovation NHS England in a discussion with Rick Morley, Managing Director, Accenture Finance & Risk, mentioned a number of interesting points:

  •  Global Healthcare is about $7 Trillion and the Global Insurance Industry is around $3 Trillion
  •  A large startup sector is springing up in both insurance and healthcare sectors
  •  There is a lot of commonalities and overlap in these two different industries
  •  Technology plays an important role in being a disrupter in both sectors

With all the health tracking gadgets – pedometers, calorimeters, fitness pals – something is changing. It’s the health and the longevity of a human being. Diseases or health problems that were once terminal, have become minor but new have surfaced. Tony Young particularly emphasized the use of technology – information technology in particular – as a driver for transformation and growth in future.

With all the data collected, analyzed and then made available back to the users of the gadgets, the healthcare and the insurance industries are undergoing a major transformation today.

Insurance – general or life, is no longer the focus of the traditional insurance practices. Clients are asking for more visibility and better personalized rules governing their policies. Insurance relies on their policy administration system (PAS) as the sacred engine, and it is often cumbersome to modify the rules in the PAS as it has overarching impacts, and is difficult for policy managers to track. This is precisely where an AI engine could help.

“AI’s initial impact primarily relates to improving efficiencies and automating existing customer-facing, underwriting and claims processes,” Price Waterhouse Cooper said in a report about AI in insurance. “Over time, its impact will be more profound; it will identify, assess, and underwrite emerging risks and identify new revenue sources.”

While we ponder upon the impact of AI on Insurance firms and their practices, a few have already been early adopters of the technology. See this article on the Outline.com – Allstate has a chat bot, the Allstate Business Insurance Expert, that leads customers through getting a quote. AIG invested in a company that sticks wearable trackers on workers in order to track safety. Financial insurance provider Manulife is partnering with an AI company to train a system to read news and emails. Chinese giant Baidu said it is already using AI systems to discover patterns that can be used in insurance underwriting.

Another area in the Insurance industry that demands a case for AI is the claims process. With the improvements in BPM systems and their integrations with ECM systems (Documentum xCP), the claim processors have become smarter in tracking all the information related to a claim, thus, reducing the claim frauds. This has already been helpful in preventing losses according to the researchers at Insurance Nexis. The mixing of AI in such a process could only enhance the application of the rules and the effectiveness of the process.

With the use of AI in policy administration, newer insurance products can be launched quickly and more effectively. They can even integrate with the fast inflow of information coming from various sources and provide a personalized service. Not only this is gratifying to the policyholder, but also rewarding for the policy administrator.

Change is coming, though at a smaller pace than perhaps could be expected, given the obvious benefits.

Nitin Rastogi

Nitin is an EIM enthusiast with a passion for finding patterns and use cases for technology to solve problems. He has a great penchant for noticing patterns and using them for the business growth. Nitin has been working in the field of BPM and ECM and helping his clients solve their problems.

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