The last decade saw a huge change in the way insurance industry functions. As we step into 2020 with AI-driven InsurTech initiatives, the next one promises to be even more of an adventure. Innovation and technology are going to be the forefront, but any predictions about future trends may have a tendency to be short-lived.
At the beginning of the previous decade, it would have been impossible to imagine that the consumers would trust their hard-earned to anyone other than a qualified agent, who could deliver a personal touch and inspire confidence in their investment. Today, insurance customers are willing to buy insurance and take financial advice from AI virtual assistants. If this is not a leap in the way insurance is sold, what is?
The Appeal of Gaining the Competitive Edge
It is an understatement to say that the insurance business is competitive and driven by the need to acquire as much market share as possible. So it is not a stretch to see insurance company executives are already increasing their investment in technology and embracing transformation.
The insurance industry landscape is slated to change with new offerings and alliances. Insurance companies usually prefer to control their data, which may be one of the reasons they may be looking to acquire InsurTech companies, so they can deal with data regulations better and keep their data insights and products in house.
As adoption of digital tools and solutions increases, the focus on delivering an experience to customers would also increase, as delivering exemplary customer service is the way to retain and gain consumers.
The Focus is on the Customer
Insurance companies are still looking to satisfactorily cater to the customers who are quite technologically savvy and are used to the ease and convenience of shopping online that allows self-service. At the same time, human interaction is not something that can be replaced, as more complex insurance products would need the expertise of agents and brokers.
Similarly, while settling claims can be automated and classified quicker and more accurately with the help of AI, the domain knowledge to train the AI to know the difference would have to come from the experts. Better case classification and settlement recommendations lead to quicker settlements and thereby increase customer satisfaction scores for the company.
The hybrid option of offering customers multiple channels – self-service or via agents and brokers – to choose products, find product information, and file claims are going to be a more popular choice. To make this kind of offering a reality, the online channels need to be designed with advanced AI capabilities to offer better advice via chatbots, and the agents and brokers need to be armed with data insights gleaned with AI-powered analytics.
Data can be leveraged to connect dots in customers’ profile to understand and anticipate their needs and requirements. Such insights can help the company cross-sell and up-sell their products, and even offer custom products to their customers on the basis of aspects like demography or geography. With the customers’ help, it is now possible to reduce the time required to choose the right product and calculate price points.
Innovate, Innovate, Innovate
InsurTech companies are already focusing on delivering end-to-end solutions to bring all existing and emerging technologies together. This will be crucial in the next two to three years as insurance companies are wary of tech solutions that may not serve them in the long run and require them to purchase additional solutions as new technologies enter the market.
Technology disruption may have caused the industry to change operational ways, but adoption is still witnessing challenges. Developing customized solutions that can drive transformational change initiatives and also deliver AI advantages without black-box limitations. To aid this transformation drive, InsurTech companies will have to focus on innovations more than ever before, which may lead some to play safe and offer boxed-up solutions, whereas some may be more inclined to take risks. However, risk is something that insurance companies always look to mitigate.
The answer may lie in conducting data experiments that involve both data experts and data scientists.
This is how Jenny Rone, the assistant inspector general for data science at USDA, has applied data and domain experts:
“Most of what we’ve done focused on self-service business intelligence tools. For instance, when we received funds to oversee the 2017 disaster season, we built maps with geospatial information systems (GIS) tools. We took GIS coordinates from FEMA and we created the base based on those disaster declarations.
We then took contract data from Federal Procurement Data System (FPDS) and overlaid that based on the national interest action code. Our auditors and investigators could see the big picture and they were able to drill down on specific areas and individual contracts, which aided objectively scoping our oversight activity.”
Such initiatives are the way forward toward bringing data analytics and people together.
A Roadmap for Insurance Claims Settlement Processes
While everyone is talking about adopting more AI-based solutions, there not enough focus on the implementation and execution aspect of it. The claims managers are the ones who will end up using the technology most.
Some claims managers may be required to oversee the AI data training and ensure that the knowledge from adjusters is transferred without biases into the neural networks of the AI solution. They would also need to constantly prioritize information based on each case’s requirement and ensure the criteria for straight-through processes is carried out correctly.
Hence, InsurTech companies will do well to ensure they have pilot programs designed with the claims managers in mind. They would need to:
- Understand how the solution works
- Be able to identify inefficient processes
- Assess the impact of the changes on the staff
- Know how to evaluate pilot program’s efficiency
- Process feedback received from employees, policyholders, brokers and agents
Claim settlement officers would also need to understand that the AI technology is here to make the process more efficient and make their jobs easier. This understanding is also possible when the pilots are executed efficiently.
While there is a lot to look forward to in the insurance AI solutions domain, there are many challenges waiting to crop up as well. The increase in the number of natural disasters and climbing figures of accidents makes the job of insurance companies and their settlement departments that much more difficult. Embracing AI technology to leverage data, both existing and new, makes sense on all levels, and when it is applied to complement human intelligence and compassion, it ends up delivering a winning outcome for everyone.