How AI is Transforming the Insurance Industry

In the digital age of the empowered customer, the insurance industry is not known for being innovative or focused on enhancing the customer experience. However, once again, artificial intelligence (AI) is expected to disrupt the entire sector in a tech-driven seismic shift.

The PwC’s 20th CEO survey asked 95 CEOs across 39 countries to share the most significant challenges facing the insurance sector today. Predictably, the constant threat of over-regulation combined with the speed of technological change and change in consumer behavior or expectation at the top of their concerns.

The rise of automated processes is enabling consumers to acquire insurance policies with a few clicks or swipes on their mobile devices. Forward-thinking insurers are already leveraging integration gateways that rely on big data and AI to provide next-generation customer experiences. 

There is increasing awareness around the wave of disruption and change that will transform the insurance industry sooner, rather than later. However, the long list of challenges also paves the way for AI-powered opportunities that could streamline legacy sales processes, increase conversions and productivity, and significantly reduce claims fraud.

The narrative of AI delivering unprecedented efficiencies at the expense of jobs couldn't be further from the truth. The Future Workforce Insurance survey highlighted that companies that invest in AI and human-machine collaboration could boost their revenue by an average of 17 percent and their employment by 7 percent.

Ensuring acceptance of any intelligent technology and using it to drive meaningful change will require considerable investment in reskilling programs. A robust leadership strategy dedicated to AI, transforming not only their organization but the entire industry, is also fundamental to its success.

It's important to remember that it’s consumers who are leading the way with technological change and expecting businesses to keep up the pace. IoT sensors, smartphones, and wearables are creating a wealth of data from the connected home in real-time. But constant vigilance to risk is also the very essence of the insurance business model.

For example, many people believe that the biggest threat to their home so they naturally add CCTV cameras and intruder alarms. However, insurance data reveals that a water leak is by far the most high-frequency insurance claim. Emerging home-awareness solutions such as Notion can send a notification to your phone if the sensors pick up a leak, a smoke alarm going off, or if the lights have been left on. 

A wealth of data should enable companies to use AI and machine learning to analyze data patterns and provide personalized policies. How insurers collect, store, and use third-party or customer data through AI-based solutions and algorithms will play a significant role in how they build or lose trust with their customers.

Consumers expect minimal touchpoints on their customer journey. As a result, successful insurance companies must remove pain points and introduce innovative products. Flexible and personalized policies that treat policyholders as unique individuals rather than generic one-size-fits-all approaches will be paramount.

For insurers to genuinely exceed customer expectations through individualization, they must embrace the opportunities that AI offers. Leveraging machine-learning insights from a variety of connected devices and data sources is only the tip of the proverbial iceberg.

At IPsoft, we have worked closely with a Fortune 100 insurance company to integrate AI into their customer-facing teams. They are using Amelia to connect conversations to data and processes. As a result, Amelia is now handling approximately 10,000 interactions per day and doing so at a 93% accuracy rate. 

The streamlining of legacy processes and lowering of costs will appeal to those looking for ROI. But it’s employees who need to be at the heart of this digital transformation story. A combination of bringing in new talent, redesigning roles, and reskilling employees essential.

AI has the potential to boost innovation, growth, and efficiency, but insurers’ hesitance to properly reskill their employees could limit its impact - Michael Costonis, Accenture.

The workforce and roles of tomorrow will look significantly different than they do today. It’s time for insurers to start planning and developing their employees and ensuring that everyone comes along for the ride and nobody gets left behind.  

The road ahead should be seen as an exciting challenge and a perfect opportunity to explore how companies can develop their employees. AI has already generated significant benefits for insurers, brokers, and customers alike. But with great power comes great responsibility, and planning a future strategy requires a human skillset, rather than an AI one.

Welcome to the brave new world of insurance where collaboration among technology, employees, and policyholders works seamlessly across a myriad of devices in real-time across the world. Thankfully, it seems that the opportunities ahead far outweigh the risks, which is the kind of language that insurers like to hear.

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