The insurance industry is experiencing a revolution thanks to the industry-wide introduction of artificial intelligence (AI), particularly in claims processing. According to McKinsey, the share of automated claims processing is expected to reach 50% in the next decade. Improved algorithms now automatically detect claims in their path to maximize accuracy, reduce processing time and improve the customer experience.
IoT sensors and capture technologies are gradually replacing traditional manual means of initial notification. For example, in car insurance, the customer usually sends photos instead of sending an adjuster. In the event of an accident, a policyholder can send a video of the damage. Vehicles with autonomous functions that suffer minimal damage are automatically forwarded to a workshop and a replacement vehicle is sent to the location.
Automated customer service applications handle most of the interaction with policyholders in voice and text, following self-learned scripts linked to the claims, fraud, medical benefits, policy and repair systems. Some claims are processed in minutes, not days or weeks. There needs to be people responsible for complex or odd areas, a disputed claim and spot checks to ensure proper control of algorithmic decision making.
Insurers are becoming more vigilant in monitoring and avoiding risk and working to mitigate risk. Policyholders receive real-time alerts in conjunction with automatic inspection, repair and maintenance actions. This automation has many advantages in claims handling: it is more efficient, more cost-effective and increases customer satisfaction. Shorter insurer response time and greater accuracy in estimating claims are some of the key areas of improvement.
However, the switch to AI is no walk in the park. It requires a technological infrastructure in the background and the handling of large amounts of data. Transparency and the ethical use of AI algorithms are other important attributes that insurers need to solve in order to eliminate bias and act fairly. Another shortcoming is that the chatbot cannot answer a question, which can lead to secondary offense to the policyholder.
To address the paradigm shift described above, insurers need to invest in new technologies, develop appropriate data strategies and design the right talent architecture. The ability to be agile in new technologies and processes will make insurers successful in the future.