Artificial Intelligence (AI) has transformed industries through its evolved predictive capabilities and superior decision making. Whether we talk about retail, hospitality or healthcare, AI has driven exponential growth in each industry. By leveraging app-based AI and machine learning technologies, businesses can be enabled to interpret situations, adapt to changing scenarios and predict outcomes in real-time with nearly no human intervention. This will have a plethora of uses in various industries – including insurance.
AI and the Insurance Industry
Today, the insurance industry is at the cusp of a big paradigm shift. While most sectors are making a relatively seamless shift to AI-driven processes, insurance is struggling due to its unstable nature and high associated risk.
Some of the greatest concerns in the insurance sector today include slow economic growth, limited technological innovations, need for regulations and subdued premium rates among others. Intense market competition is also a big challenge facing insurance giants today. With new InsurTech entrants constantly emerging in the market, traditional insurers need to integrate AI and technology to not get left behind.
According to a leading report, AI is set to trigger a 10 – 40% increase in labor productivity in eleven western industrialized countries and Japan. These countries are set to double in economic growth by 2035, according to the projected study. While this seems like a tall order, there’s no denying the positive effects on growth that come with AI. The insurance industry is on track to reap these benefits too. In fact, AI can and is being applied to many facets of insurance, namely:
- Insurance covers for smart factories, driverless cars, losses due to cybercrime and smart sensors
- Optimizing processes like risk calculation and prevention, asset management and claims analysis
- Handling investment decisions with precision, thanks to the vast quantities of unstructured data that companies currently sit on
- Selection of better investments based on customer preferences, risks and spending patterns
- Seamless integration with ATMs, mobile payments, and online claims processing so that digitally connected individuals make better decisions by improving transparency in data interpretations
Integrating AI in Insurance Seamlessly – Identifying Challenges and Bridging the Gap
While there are abundant opportunities to leverage AI in insurance, there are some real-world challenges that make the integration rocky. Some of these concerns along with how insurance companies can tackle them are listed below:
- Negative mindset towards analytics: Insurers are sometimes opposed to fully committing to capable analytics. There is an aversion to adopt technology because of the risk of data leaks. However, to truly leverage AI to its full potential, customer behavior analysis, segmentation and predictive modeling are a must. They are the drivers to set data-powered technologies in motion. Without robust analytics and dashboard visualizations, insurers cannot expect AI to provide deep, strategic insights and decisions. In addition, AI-driven platforms are enabled with stringent security measures to avoid data leaks.
- Threat of new entrants: Lean and agile InsurTech players are entering the insurance market with affordable, intuitive solutions that reach and serve customers quickly and effectively. To keep up with them, traditional insurance firms must learn to step up their AI-game. We are clearly moving towards a transparent, data-driven, digital world and insurance companies, with their vast amount of data, can become powerhouses if they leverage AI. In fact, according to a leading industry report, insurers are responding positively to this challenge as 67% of leaders believe that AI-driven possibilities and innovation will be critical to their growth.
- Stakeholder resistance: Very often, insurance companies face resistance from agent channels and distributors to implement AI technology. Due to misguided inhibitions, these stakeholders anticipate risk and are fearful of syncing machine and human labor to maximize productivity. It is therefore essential to alleviate this tension by having a clear proposition on how AI-integration will simplify mundane tasks and improve customer experience. Insurance CEOs are stepping up and helping with this issue as 61% believe that synchronized human and machine functioning will help their businesses gain a competitive advantage.
How can OSG help?
OSG’s bespoke behavioral and cognitive analytics platform can help you manage business risk every step of the way. Powered by OSG Dynamo™, our AI-driven big data analytics platform, we can help you analyze your customers’ behavior and choice patterns to deliver superior engagement, lower risk, lower claim and increase engagement exponentially. By identifying sources of fraud and detecting noise to signal ratio, OSG can lower your costs, thereby delivering superior outcomes.
We hope this information has been valuable and interesting to you. Please do feel free to share it with colleagues and others in your network. We welcome discussing this topic further with you and understanding your specific challenges.
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