How AI is Changing the Insurance Industry

Ever since the launch of ChatGPT in November, it has become increasingly apparent that artificial intelligence (AI) has the power to transform the future of business and the way people work and live. For context, artificial intelligence is a technology that replaces tasks that normally require human intelligence with computerized systems. Overall, Ai is expected to bring about significant changes and improvements in many different industries from retail to manufacturing and even car insurance!

According to McKinsey, Ai will completely reshape the insurance industry from its current state of “detect and repair” to “predict and prevent”; enhancing comprehensive insurance underwriting, claims settlements, fraud detection, and optimizing the customer experience. This rapid change means big things for insurers and applicants alike. So, without further ado, we asked the chatbot to help us understand how can Ai add value to the existing tedious and exhaustive insurance process.

Benefits of using Ai in insurance

With the need of the hour and digitalization, it has become imperative for the insurance industry to adopt the latest Ai technologies. As a matter of fact, many insurance companies are already experimenting with new ways to incorporate it into their day-to-day operations in anticipation of further technological development. In particular, ai solutions can provide:

• Advanced underwriting & risk assessment
• Personalized insurance policies
• Faster claims processing 
• Fraud prevention
• Improved customer experience

Advanced risk assessment

One of the main ways Ai can improve the insurance industry is around pricing. Traditionally, insurance companies estimate the chances that the policyholder will file a claim based on how other drivers in the same risk class act. The trouble, of course, is that no two drivers are exactly the same. Riskier risk groups will pay higher premiums—for example, a young driver will always pay more, even if they have never been involved in accidents; because insurance companies classify them as high-risk drivers.

More accurate risk assessments, mean more appropriate premiums. 

With Ai, underwriters can analyze massive amounts of information from various sources such as driving behavior, vehicle condition, location, weather, traffic, etc to gauge risk factors accurately. This kind of data allows insurers to understand each customer’s individual circumstances and driving behavior. In return, this helps customers get fairer prices based on their actual risk profile, rather than general assumptions about driver demographics or other broad categories.

Additionally, Ai will help insurers offer personalized and flexible policies that suit the needs and preferences of customers. Fortunately, you don’t have to wait long for a smart way to buy car insurance! Many platforms and websites can replace any smart robot to help you buy the best car insurance. Insurance comparison sites, such as wakeel, can help you get multiple insurance quotes instantly, compare prices and benefits, and buy your coverage online!

Claim settlement

Currently, the insurance claims process requires complex coordination between many different parties and features a range of difficult steps, each step prone to inefficiency, errors, and delays.

Normally, there are certain steps to follow after accidents in Saudi in order to fulfill the requirements to submit a damage claim. This all takes time. As a policyholder, you’ll have to wait for the accident report to determine liability first. After that, you will need to assess your damaged car and get 3 quotes from different workshops (more waiting). Once, you file your claim, you will have to wait again for the insurance company to process your request. Finally, you will have to wait again as the repairer works on your car. Overall, it’s a time-consuming, repetitive, and onerous series of tasks and stages. 

In the future, Ai will speed up the claims process. Basically, Ai tools will allow policyholders to scan damage to their car after an accident using their smartphone, which enables the Ai to quickly interpret the visual data, assess the damage, and settle claims. This function could potentially guide customers through the whole process without human intervention.

Damage assessment

Moreover, Ai will help insurers to assess and review insurance claims and determine the value of the damages through image analysis only, in a much faster and more accurate way.

To do this, insurance companies will start training machine learning models on large datasets of labeled images to enable them to identify specific types of damage, such as dents, scratches, or total loss. When a user uploads an image, Ai will compare the damage with an extensive database of parts and prices to provide accurate and fair estimates.

Once the results are out, an insurer can look over them to verify and settle the claim immediately. With Ai-powered solutions, the time needed for processing claims could reduce from several days to hours or even minutes.

Fraud detection

The insurance sector is one of the most vulnerable sectors when it comes to financial fraud. Previously, Najm CEO reported that the cost of car insurance fraud totals nearly SR100 million per year. In most cases, fraud involves exaggerating claims or staging accidents to receive an insurance payout (or an increased payout).

Insurance fraud can have a significant impact on policyholders in several ways. Mainly, it can lead to higher insurance rates for honest policyholders in Saudi; as insurance companies try to recoup the losses from fraudulent claims. Ever since 2019, Najm has deployed SAS artificial intelligence and analytics solutions to uncover and detect fraud in insurance.

How it works

Ai will help insurers detect and prevent fraud, using anomaly detection, pattern recognition, and behavioral analysis to identify suspicious claims or behaviors instantly.

By analyzing millions of images and identifying anomalous patterns, machine learning models can determine whether the damage was caused by a rear-end accident or a fallen tree branch! These algorithms can be trained to look for specific patterns, such as claims that appear to be staged or exaggerations of damages or injuries, and they can continuously learn and adapt to new data to improve their accuracy over time. By detecting fraudulent claims early on, insurers can reduce losses due to fraud and ultimately reduce the costs of insurance for honest policyholders

Ai impact on the insurance sector

All in all, Ai is definitely reshaping the insurance industry, offering a wide range of benefits to both insurers and their customers. Ai-powered insurance can improve accuracy in predicting risk and setting premiums, flag potentially fraudulent claims, and personalized insurance coverage. By leveraging this technology, insurers can increase their efficiency, while simultaneously offering their customers better value, more personalized coverage, and faster claims processing. As the insurance industry continues to evolve, the role of Ai and machine learning in insurance is likely to become even more important.