By TM Shyamsunder
The insurance industry is one of the oldest industries in the world, but it has been slow to adopt new technologies. However, the emergence of artificial intelligence (AI) has presented an opportunity for insurers to revolutionize the way they operate. AI has the potential to improve risk assessment, streamline processes, reduce costs, and enhance the customer experience. Some of the key areas where AI can be applied in the general insurance industry and how it can change the way insurers operate are given below.
Claims Processing
Claims processing is another area where AI can have a significant impact. The traditional claims processing process can be slow and bureaucratic, leading to delays in claims settlement and increased costs for insurers. AI can be used to automate claims processing, including fraud detection, to reduce costs and speed up the claims settlement process. For example, AI-powered image recognition software can be used to quickly identify and assess damage in the event of an accident.
Customer Service
AI-powered chatbots can be used to provide customers with instant answers to their questions and help them through the claims process. Chatbots can also be used to personalize the customer experience by offering tailored insurance products and services based on individual needs and preferences. This can improve customer satisfaction and reduce churn rates.
Risk Management
AI can be used to identify potential risks and anticipate losses, allowing insurers to take proactive measures to mitigate them. For example, AI can be used to analyse weather patterns and predict the likelihood of natural disasters. This can enable insurers to prepare for and respond to events more effectively, reducing losses and improving customer satisfaction.
Personalization
AI can be used to analyse customer data and provide personalized insurance products and services. For example, AI can analyse driving behaviour and offer customized car insurance policies based on individual driving habits. Similarly, AI can analyse health metrics and offer personalized health insurance policies that are tailored to individual needs and preferences. This can improve customer satisfaction and reduce churn rates.
The increasing use of IoT devices in the motor and health insurance sectors presents a significant opportunity for insurers to improve risk assessment and offer customized products to customers. IoT devices can collect vast amounts of data, including driving behaviour, health metrics, and other relevant information. Insurers can use this data to gain insights into risk factors and personalize insurance products based on individual behaviour and health status. IoT devices can also be used to monitor driving behaviour and health metrics, allowing insurers to offer usage-based insurance products that are tailored to individual needs.
In order to stay up-to-date with the latest trends and technologies, insurers can foster a culture of innovation and experimentation within their organization by taking the following steps:
Creation of environment where digital is employed, utilised and adopted seamlessly: Insurers can create an environment where digital is employed and adopted seamlessly, allowing employees to explore new technologies and tools to improve customer experience.Conducting workshops for increased awareness: Insurers can conduct workshops and training programs for their employees to create awareness and educate them about the latest trends and technologies in the insurance industry.Creating awareness of the ease of digitized model of businesses: Insurers can demonstrate the convenience of operating a digitized model of business with examples from day-to-day life, encouraging employees to embrace new technologies and tools.Estimating the accurate costs and pool funding: To implement new technologies, insurers need to estimate the accurate costs involved in adopting them and pool the necessary funding to ensure the smooth transition.Laying of sound technological infrastructure and networking system: Insurers can partner with state-of-the-art corporations for the best consumer experience, similar to Tesla and Cisco, and ensure they have a sound technological infrastructure in place to support digital channels.Encouraging secured and faster payment systems: To facilitate easier and faster payments, insurers can encourage the use of secured and safe payment gateways such as GPay, PhonePe, Bhim, and other UPI payment options.Creating a stringent feedback system and quick troubleshooting mechanism: As experimentation with new technologies is bound to result in some failures, insurers need to have a stringent feedback system in place to share feedback with vendors, and a quick troubleshooting mechanism to ensure business continuity.Moving on to cloud storage system and cloud computing: Insurers can move towards cloud storage systems and cloud computing to simplify data storage and streamline operations.
In conclusion, AI has the potential to revolutionize the insurance industry by streamlining processes, reducing costs, and improving the customer experience. Insurers that effectively leverage AI can improve risk assessment, offer customized products, and increase customer satisfaction. The effective use of AI requires a strong focus on data collection and analysis, as well as the development of predictive models and customized products that meet the evolving needs of customers. As the insurance industry continues to evolve, insurers that embrace AI will be best positioned to succeed.
Also, digitalization is transforming the insurance industry in India by enabling insurers to offer products and services through online and mobile channels. While this trend is beneficial for both customers and insurers, it also presents some challenges that insurers must address, such as cybersecurity, technology infrastructure, talent acquisition and training, and regulatory compliance. Insurers can foster a culture of innovation and experimentation within their organization by creating an environment where digital is employed seamlessly, conducting workshops for increased awareness, encouraging secured and faster payment systems, and creating a stringent feedback system and quick troubleshooting mechanism. By embracing new technologies and tools, insurers can improve customer experience and stay ahead of the competition in the rapidly evolving insurance industry.
(TM Shyamsunder, COO, Royal Sundaram General Insurance. Views expressed are author’s own.)