The most notable technological developments around the world are brought to us by AI and ML. The disruption from COVID-19 has significantly accelerated digitization for insurers. The increased emphasis on these technologies and a greater willingness to embrace change will put organizations in a better position to incorporate AI into their operations.
The insurance industry is tapping AI for its promising future benefits. From distribution to underwriting and pricing to claims, these latest technologies will have a seismic impact on all aspects and elevate the insurance industry from ‘Static’ to ‘Dynamic’.
Big data and AI/ML are already improving the underwriting process, with policies being priced and purchased, in near real-time. From claims registration to claims settlement, everything has become accessible and more efficient. AI-driven detection of early risks enables insurance companies to analyze risk management and prevent losses. Also, the possibility of human error and fraudulent activities lessens with the increase in the usage of AI and ML. These further helps the insurance companies to understand the trends in customer behavior.
In this blog, let’s focus primarily on the impact of AI and ML on the Underwriting Process. Underwriting is mainly about analyzing insurers’ past facts, medical histories, bank statements, etc., and assessing the risk of issuing a policy. If we see the conventional underwriting process, it involves piles of tiresome paperwork. The introduction of AI and ML in underwriting is advantageous to both the company and the customers. It saves money, increases revenue, speeds up the work, and makes it more efficient.
The insurance sector will turn from ‘Identify and Restore’ to ‘Anticipate and Avert’ within the next decade. The combination of AI and ML has automated the underwriting process greatly and is soon expected to move into the ‘Augmented Reality Era.’ With the introduction of AI and ML in underwriting, information is converted into actionable insights by gathering and passing it through machine learning tools and algorithms. AI has helped insurance companies escape the financial and operational hardships connected to manual underwriting. Listed below are a few ways in which AI is transforming underwriting in the insurance sector:
The immense growth of AI and ML worldwide is undeniable. The winners will be carriers that use these innovative technologies to streamline processes, harness insights from new data sources, exceed customer expectations and lower costs. Companies that focus on creating opportunities from disruptive technologies—instead of viewing them as a threat are sure to thrive in the insurance industry.