Can Artificial Intelligence Lower Insurance Costs?
April 30, 2024
From underwriting to fraud detection, artificial intelligence is a tool that has the potential to impact the insurance industry in many ways.
The application of today’s chatbot technology can help agents, claim processors and customer support personnel to provide improved customer service using virtual assistants. In addition, AI can personalize coverage options by analyzing customer needs and risk profiles.
No job in the industry requires better communication skills than claim adjusting. These are vital when collaborating with customers. Plus, a human is needed to make judgment calls in complex situations where there’s a need to consider implications beyond the immediate.
AI is simply a tool that can help customers, agents, service reps and adjusters to make better decisions.
By being highly adept at reducing human error, assessing overall risk, and detecting claims fraud, artificial intelligence will continue to automate processes, optimize human resources, and develop more effective strategies for connecting with customers. Providing personalized interactions becomes easier to achieve when AI is correctly applied to remove mundane processes from the human workload.
How AI is Helping the Insurance Industry
As is the case in many industries today, AI is transforming every aspect of doing business as well as providing products and services to customers more efficiently. In part, artificial intelligence engines become more adept at performing tasks as they perform more tasks. Some important areas of utilization that are expected to lower costs include:
- Advance Mobile Interactions – Home, auto and commercial insurance companies have already embraced doing business with customers online. In the coming months, algorithms will continue to refine their ability to provide quotes and issue policies for a wider range of products and services in a more sophisticated way.
- Reduce Overhead Expenses – Although language models learn from humans, they still make decisions based on mathematical probabilities. So rather than humans being replaced by AI, it is the augmented intelligence of combining the intuitive nature of a human agent with the processing power of AI that will be needed to reduce expenses and lower costs.
- Develops Cognitive Technologies – AI-based cognitive models can instantaneously authorize payments by streamlining the acquisition process to generate a bindable quote and purchase agreement. Complex data streams linked to a customer’s behaviors and activities will enable agents to work with AI models that are constantly learning and adapting.
- Sharing of Multiple-Use Data – Claims processing is a critical task for settling insurance claims. Through data sharing most fraudulent claim attempts are thwarted by feeding historical data into a large language model with machine learning. Both public and private entities are creating private ecosystems to share data across the industry.
- Faster Distribution of Products – Since AI algorithms can create more accurate risk profiles much faster, completing the process of placing business, personal, or auto insurance policies will require less effort on the part of the agent and customers. Pricing algorithms process data in a more granular way to support instant access to insurance coverage.
- Managing Insurance Claims Fraud – Artificial intelligence is ideal for detecting and determining insurance claims fraud. According to FBI records, covering the cost of insurance fraud is $300 billion annually, which requires adjustments to premiums. More than half of insurance companies already rely on machine learning to detect both old and new fraudsters.
Some insurance carriers have already embraced artificial intelligence to streamline numerous processes, connect more seamlessly with their customer’s devices, and reduce overall costs of doing business. It definetly helps to quickly forecast potential risks, which can lead to more precise pricing and better overall risk management. This includes estimating the risks of natural disasters or higher incidences of auto accidents to identifying areas for cost-savings in writing coverages.
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Depending upon the individual carrier, there are many smart ways to reduce your cost of auto insurance, homeowner’s insurance or bundled commercial insurance policies. Contact Nsurance Nation to find out what discounts our insurers offer and how to get the best deal possible despite any unique circumstances. For the latest tips on reducing the cost of 2024 insurance coverage, visit our monthly Blog.
