AI and ML – Transforming the Insurance Sector

Oct 8, 2021

AI and ML Transformation

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 RPA in 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 help 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 Artificial Intelligence and Machine Learning to drive Efficiency, information is converted into actionable insights by gathering and passing it through machine learning tools and algorithms. AI has helped insurance data migration 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:

• Improvement of Underwriting Risk Management: Using AI, the underwriters can identify the most relevant risks connected to the client profile amongst the insurance companies’ vast data. Henceforth, underwriting risk management is enhanced and improved.

• Fair Pricing and Profitability: AI makes risk visible, which helps insurance companies to give the best pricing options. After risk assessment, the premium amount is decided accordingly. This enables the companies to gain profit.

• Increase of Efficiency in Underwriting: Manual Underwriting used to take a long time and had a high probability of human errors. But with AI, the work speed has increased, and also human errors are minimized.

• Enhanced Customer Loyalty: AI-driven Underwriting Systems help insurance companies to serve customers better. This builds the brand reputation and makes the customers loyal to the insurance company.

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.