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How AI is transforming the insurance industry

Apr 12, 2023

Artificial intelligence (AI) is revolutionizing the way businesses operate across every industry, and insurance is no exception. By automating processes and analyzing vast amounts of data, insurers can improve their customer experience (CX) and streamline their operations. From generative AI (such as ChatGPT) to predictive analytics, there’s a little something out there for every insurance agency.

And, while exploring AI for your business might sound daunting, those who find the right use cases and harness the power of AI to operate better today will emerge as industry leaders in the near future.

Here are some key benefits of AI in insurance that show how artificial intelligence can become an essential part of your CX toolkit.

Understanding AI in insurance

AI is an umbrella term that encompasses a broad array of technologies, including predictive analytics, machine learning (ML), deep learning and natural language processing (NLP). These technologies enable computers to learn from experience and improve their performance over time. For example, a customer support chatbot can give customers more detailed, accurate answers over time as it chats with more and more customers and is trained on a larger database of customer support requests.

The impact of AI can be felt companywide. McKinsey & Company predicts that the use of AI by insurers could lead to a 40% decrease in operating expenses by 2030. Additionally, AI-powered insurance experiences have been found to increase customer satisfaction by up to 20%, according to Capgemini.

Finally, a study by Salesforce found that more than 60% of customers say they’re open to AI being used to improve their experiences. What are some key use cases of AI for insurers?

Personalization and recommendations

By analyzing customer data, AI can help insurers offer personalized recommendations and tailor their products and services to individual customer needs. For example, a life insurance company can use AI to recommend policies based on a customer's age, health and lifestyle. In addition, AI can be used to segment audiences by a dizzying number of factors and can dynamically create marketing campaigns or offers that have a higher likelihood of triggering a positive response from customers. Since this can be done entirely by computers, agents can use AI to hyperpersonalize customer outreach without necessarily increasing their workload.

Claims processing and fraud detection

AI can help insurers process claims more efficiently and accurately. By analyzing data from various sources, including photos and videos, AI can detect fraudulent claims and flag them for review. While AI-powered claims processing can improve efficiencies and reduce cost, computer vision algorithms can also help speed up the claims process for customers, allowing insured customers to receive claims checks faster.

Risk management and underwriting

AI can help insurers evaluate risk more accurately and improve underwriting processes. For example, an auto insurer can use AI to analyze data from telematics tracking devices and offer more accurate pricing based on a customer's driving behavior. These systems produce data records which can include G-force values, date, time, speed, location, cumulative trip mileage and fuel consumption. They can help insurers more accurately estimate accident damages and reduce fraud by enabling them to analyze driving data such as hard braking, speed and time during an accident.

Chatbots, virtual assistants and 24/7 support

AI-powered chatbots and virtual assistants can provide 24/7 support to customers, answering questions and resolving their issues. This can not only improve CX, but it can also reduce the workload of customer service teams. Virtual assistants are infamously not dependent on a visual user interface either. This means that insurers can reach their customers outside the context of their website, customer portal or mobile app by integration with voice tools such as Amazon’s Alexa devices, for example. Virtual assistants also make 24/7 support a reality — a first for many insurers — meaning customers are not limited in their outreach capabilities.

Steps insurers can take to implement AI

As digital technology advances, customers are starting to judge companies by how digitally evolved they are. PWC research found that more than 40% of insurance customers say they’d likely switch providers who lack core digital capabilities. Insurers who are not already making strides to pursue initiatives, such as those empowered by AI, will be left behind.

Implementation can be even more challenging than developing strategy. To launch AI effectively, insurers need to take several steps, including:

  • Identify the areas where AI can have the most significant impact on their CX process, such as claims processing, customer support and product personalization.
  • Validate that your data collection strategy and storage process is sufficient to enable AI to do its best work.
  • Choose the right AI technology and tools for the job.
  • Train employees (you may need to hire up) to work with AI systems and ensure they understand how to use them effectively.

How Wipfli can help

Wipfli has decades of experience helping insurers transform their digital capabilities, leveraging the latest technology and responding to emerging consumer trends such as the flight to AI-powered customer experiences. If AI and CX are part of your leadership team’s conversations, we can help you prioritize, plan and implement AI initiatives that can achieve real ROI for your insurance agency.

Contact us today to learn more about insurance industry solutions that can give you a competitive edge.

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Billy Collins
Senior Manager
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