How AI & Business Automation Can Help Insurance Industry Fight With Global Economic Slowdown?
The world is facing a complete lockdown. We’re not even stepping out of our home for a stroll. It's just our home-office, more personal time with family, and doing those odd tasks which we often neglected being so busy in our cubicles.
Right? Or you beg to differ?
No matter how much we miss the cubicle at our office, we are equally scared of the virus threat.
COVID-19 is one of the rare pandemics that appeared in the last few decades and engulfed the whole world in a bad shape. With the increased threat to life, people have started to bring out their insurances right on the table. In this evolving situation, just like other businesses, insurance companies are also facing unique challenges. And I guess they are the most perturbed one that this time. Though the industry is shaken up by the threat, all credit goes to Artificial Intelligence, which is helping the insurer to go further in these hard times. From providing real-time assistance, evaluating the claims, or checking annuitant liveliness from home, AI has proved their abilities to a large extent.
Even there is news in recent dates on how AI is shaping the insurance industry, like ICICI Lombard CTO, Girish Nayak has to say that, “If you’ve ever filed an insurance claim, you know how much time it can take from start to finish. Many customers dread having to contact an agent and walk through the dozens of questions needed in order to complete the claim, but AI hopes to change this process by speeding it up and making it more accurate. Instant responses via chat boxes allow customers to get information directly after an accident.” (Source: Economic Times India)
So, how is AI tackling this tough time? Let’s see a bird-eye view of the worldwide Insurance Companies using AI?
Unique Challenges the Insurance Companies are Currently Facing
Before I jump into the discussion of how AI is helping with Insurers. Let us see the challenges which came upon this industry in recent days. This will help us to dig in further and evaluate that this industry will be able to face the virus threat, survive and be the phoenix or never rise from the ashes.
- Putting strain on the investment portfolios - Insurance companies rely heavily on their investment portfolios to generate returns. The current market is in a turbulent state and as a result, the insurers’ investment portfolio may be significantly impacted. Moreover, the income revenue streams may dry up quickly as interest rates continue to drop.
- Delay in payments - Various regulators are requesting the insurance companies to accept late premium payments with no penalty charges, putting up a strain on the cash flow. Despite liquidity can be a major impact, but insurance companies are still expected to pay out the claims.
- A decrease in premium volume - Most of the businesses are having a full or partial closing coupled with social distancing that leads to the decline of the insurance and its demand. Lower payroll level will lead to low payroll-based premiums, like those in workers’ compensation and an uptick in layoffs to buy houses, cars, and other insurable purchases.
- Covering of the disputes - In an insurance policy coverage for pandemics is never included, hence the necessary charges are not even provided. A number of states are an attempt to legislate it and in turn, force the insurance companies to provide insurance coverage for business interruption and other losses for the claims resulting due to COVID-19. There is uncertainty as to which party will ultimately incur the additional cost of these adjustments.
Read this News: US insurance companies will cover the costs of COVID-19 testing and treatment
AI is Actually a Boon for the Insurers Amidst COVID-19
Artificial Intelligence is one of the most advanced technologies and it is really adding an advantage to the Insurance companies amidst the virus threat. How are they coping up with all the unique challenges, which I just mentioned?
Increase in the speed of the claim process
As more and more governments ask the Insurance Companies to include the pandemics to cover in the policies. Since an insurance claim takes much time to process, in this revolting time, you do not have enough time to spare. Many customers are not in a mood to spend dreadful time contacting an agent and walk through the dozens of questions to complete the claim. AI has changed this process and sped it up and made it more accurate, which is really blissful in the COVID-19 claim processing. Instant responses through chatbots allow customers to get information on COVID-19 almost any time. McKinsey estimates a potential annual value of $1.1 trillion if artificial intelligence is fully applied to the insurance industry. Amidst the social distancing practice, there may be fewer insurance personnel, most will be working from home - no need to worry AI manages all. It also allows them to provide more customized contracts for customers based on their unique circumstances.
Better underwriting services
The most common complaint that we receive every day from the insurers is typically their prices. Insurtech companies trained in AI can create personalized rates based on the client’s actual choices and lifestyle. Factors such as distance traveled, pandemics like COVID 19, and even financial instability create more dynamically priced policies.
For example, if you have heard of Metromile, who offers insurance based on miles traveled if you do not use your car too often. The company can use the AI-enhanced sensor system to monitor the driver’s behavior and incidents if any. Similar insurance can be created for the general insurance companies based on the data provided by various fitness trackers and medical records. This is tagged as behavioral premium pricing. And it is about paying for what risks you have taken. You will no longer be a data point in statistics - it is not about approximating but about taking responsibility.
BlueCopper holds the back for the Insurance providers
AI has already seen a rise in use in the Indian insurance industry with Bajaj Allianz, ICICI Lombard, and more. As a part of this industry, working as the backbone for the insurers developing AI technologies like chatbot or claim processing tools, BlueCopper Tech is able to respond to digital demands by strengthening our central computing systems amongst other strategic interventions, while ensuring we maintain overall security all the time.
- At BlueCopper we focus more on claim settlement solutions through our AI services. Putting more focus on the time-to-settle which is consistently the metric that customers most care about.
- With our services, we have been able to extend services as an Insurtech company to the insurers to reduce fraud in claim settlement. AI will likely bring faster claims settlement with decreased fraud. This is an area of focus and potentially among the biggest “low hanging fruit” opportunities for AI in insurance.
Wrapping Up
The insurance providers amidst the COVID-19 threat did not want to tarnish the customer experience and were quickly able to respond to the current scenario. So we have enabled work from home amidst the pandemics to quickly develop AI kits for the insurers and keep on supporting our existing insurers as well as new clients with easy access to corporate applications.
In this busy schedule, we have been adding up newer payment options through AI and making them available to insurance applicants for all the sales channels to ensure customers stay invested in their policies. That’s a legitimate demand of every insurer amidst this threat. We’re serving 24/7 so that the insurance companies keep rolling as well.
We love fuelling the demand for being digital-first for both business and customers. So will you like to explore more about what we have done with AI or currently doing it for our insurance partners?