As consumers are becoming more aware of different insurance solutions, the Indian insurance industry has been witnessing rapid growth and is expected to reach $222 billion by 2026 according to statistics by IBEF.org.
According to Allied Market Research, the global AI market size in the insurance sector was approximated at $2.74 billion in 2021, with forecasts suggesting a projected surge to $45.74 billion by 2031. This signifies a notable Compound Annual Growth Rate (CAGR) of around 32.56% from 2022 to 2031.
To capitalize on this massive growth, AI in the insurance industry is making a transformative impact on the entire insurance ecosystem. Let’s see how.
Understanding AI’s Impact on the Insurance Sector
AI in the insurance industry is the application of Artificial Intelligence technologies, such as machine learning, neural networks, and natural language processing, to transform and optimize various aspects of the insurance industry.
It can serve a wide range of applications, from automating routine tasks and enhancing customer interactions through chatbots to using advanced algorithms for risk assessment, fraud detection, and pricing accuracy.
Addressing AI Integration Challenges in the Insurance Industry?
Though AI in the insurance industry can bring revolutionary enhancements. However, businesses incorporating artificial intelligence insurance solutions may face some challenges before reaping its benefits. Let’s see what these challenges are:
Lack of Quality Training Data
AI requires large amounts of high-quality data to learn and make accurate predictions. However, many insurers may not have access to such data, which can hinder the effectiveness and accuracy of AI implementation.
Data in Silos
Insurers may have data stored in different systems, making it difficult to integrate and analyze. This can affect the working of AI models during training and integration.
Regulatory Challenges
The regulatory environment for AI in the insurance industry is evolving in India, and companies will need to navigate these changes carefully. Regulators may require companies to demonstrate the robustness, fairness, and transparency of their AI systems.
Despite these challenges, AI in the insurance industry can bring several benefits, including improved risk assessment, efficient claims processing, and personalized policies. Insurers can overcome these challenges by investing in quality training data, integrating data, investing in AI talent, and navigating regulatory changes carefully.
Info Insight: 95% of Insurers say they are focused on accelerating their digital transformation initiatives according to a survey by Deloitte.
Benefits of AI in the Insurance Industry
Accelerated Claims Processing
The combination of artificial intelligence in insurance solutions can speed up the insurance claiming procedure. An AI model trained for Optical Character Recognition (OCR) can precisely scan both paper-based and digital documents. In addition to that, it enables the insurance software to figure out what key data fields to look for in different documents.
Binary’s AI-powered insurance solutions allow companies to instantly process claims and deliver customer policy and claim updates via instant messaging platforms. This not only accelerates the claiming procedure but also eliminates potential human errors.
Info Insight: By 2025, 60% of insurance claims will be sorted and prioritized with automation.
Improved Efficiency
AI insurance software can relieve staff of manual data handling activities to increase the speed and accuracy of claim processing. Insurance companies can use AI to analyze consumer data and make appropriate decisions about whether to proceed with the claims or not.
Our advanced claims management solution enables seamless integration with third-party AI/ML-driven estimation and video inspection platforms, allowing complete automation and substantial reduction of the total Turnaround Time (TAT) for the claims process.
Predictive Denials
AI can help providers avoid claims denials altogether by proactively spotting and correcting human errors by leveraging policy information, claims history, customer data, and historical denial records. AI models that use predictive analysis can easily spot mistakes that slow down reimbursement before the claim is submitted to the payer.
Binary’s Insurtech solutions offer in-depth predictive and prescriptive analytics. This way insurers can keep up with the industry trends and effectively build their decision-making strategy.
Info Insight: According to an article published by Business News Daily, human intervention in insurance applications will go down by 80% to 90%.
Fraud Detection
Insurance companies can effectively implement AI algorithms in their solutions architecture to detect fraudulent insurance claim activities. By analyzing vast datasets of policyholders and insurance claims data, AI models can easily identify anomalies leveraging historical fraudulent patterns. Moreover, using Robotic Process Automation (RPA) can minimize insurance agents’ overhead by working 24/7.
Binary’s smart insurance solution boosts operational efficiency by automating tasks, preventing duplicate data entry, and creating a centralized policyholder information hub. It seamlessly integrates with existing or custom underwriting, policy, and claims systems, and allows agents/brokers to focus on relationship management.
Enhanced Customer Experience
With the rise of Generative Pre-trained Transformers (GPT) models in the world of the internet, companies are using GPT-based conversational chatbots in their insurance solutions to resolve customer queries. Customers can use these chatbots trained on customer data, policy information, and regulatory information to resolve whatever queries they have.
Binary’s AI-powered insurance solutions allow businesses to utilize Virtual Agents, conversational AI, and voice assistants for better customer query resolution. Insurance companies can utilize these AI-powered chatbots and drive a better customer experience.
Improved risk assessment
Insurance software that uses machine learning (ML) models to flag customer behavior can help companies improve their risk assessment. Predictions made by the ML models are typically scores that indicate the likelihood of an event that is of interest. These ML models are trained on customer’s credit score, medical history, occupation, locality, gender, and many other important parameters.
Once AI models learn to predict insurance proposal behavior, the financial team can use this data to categorize proposals into different risk buckets ranging from high-risk to low-risk profiles.
Future Trends of AI in the Insurance Industry
AI is here to stay, and businesses that are inclined to its adoption are witnessing substantial growth. But what is the future of AI in the insurance industry? Well, let’s take a look at it.
Data Explosion from Inter-Connected Devices
The Internet of Things (IoT) is generating massive amounts of data every day. These devices, such as telematics in vehicles, collect valuable information about policyholder’s behavior and risks. AI will be used to process and analyze this data.
For example, auto insurance, when combined with video telematics data, offers enhanced driver behavior assessment. Video telematics can identify factors like driver alertness, drowsiness, and risky driving behavior. Furthermore, advanced telematics systems such as FleetRobo provide an accident reconstruction feature, capturing a comprehensive view of accidents from both the driver’s perspective and a third-person view. This data, when submitted during the claims process, significantly accelerates claims processing, making it a valuable tool for insurers.
Real-time Policy Updates
AI-driven technologies are enabling faster policy issuance. AI algorithms can assess customer profiles by analyzing their data and give near real-time policy approvals.
In addition to that, insurance solutions are offering digital platforms that allow customers to view competitor pricing, purchase policies, and even bind coverage within minutes.
Cognitive Intelligence
Advanced AI like deep learning will become the standard for handling the vast and complex data generated by ‘smart’ insurance products linked to an individual’s actions and behavior.
As these technologies become more common, insurance companies will have access to models that continuously learn and adjust to changing circumstances. This will allow insurance companies to engage customers while responding to real-time shifts in risks and behaviors.
Conclusion
As the Indian insurance industry experiences rapid growth, AI emerges as a transformative force. Allied Market Research predicts the expected market value of the AI insurance industry to be around $45.74 billion by 2031.
Binary’s Insurtech platform, VISoF, offers insurance companies a dynamic toolkit. VISoF seamlessly integrates diverse insurance products, such as Motor, Health, Travel, Life and other insurance services. It streamlines policy arrangement, processing, and payments, propelling innovation in the insurance sector. VISoF’s versatility empowers insurers to craft cutting-edge digital solutions that cater to specific market demands. So, connect with us and explore how Binary’s AI-powered insurance solutions accelerate claims processing and shape the future of insurance.
