As the world becomes more complex and interconnected, the need for insurance has become increasingly important. However, many people still lack adequate insurance coverage, particularly in developing countries.
Fortunately, Artificial Intelligence has the potential to increase insurance penetration by making insurance more accessible and affordable for everyone.
Here are just a few ways in which AI can help increase insurance penetration.
Improving risk assessment
One of the key challenges in insurance is accurately assessing risk. AI can help by analysing vast amounts of data on individuals and businesses to identify risk factors and predict the likelihood of a claim. This can enable insurers to offer more personalised and accurate policies, making insurance more accessible to a wider range of people.
Example: Coherent Spark’s AI-powered core parses spreadsheet coding logic into APIs that integrate with any platform. With this tool, insurers can automate many processes, including risk modelling and back-office actuarial calculations, among many others.
Enhancing underwriting efficiency
Underwriting is the process by which insurers evaluate and price insurance policies. This process can be time-consuming and expensive, particularly for complex policies. AI can help by automating much of the underwriting process, reducing costs and enabling insurers to offer policies more quickly and efficiently.
Example: Artificial Lab aims to make the complex insurance underwriting process frictionless, with its single automated platform helping insurers to underwrite faster while reducing loss ratios.
Streamlining claims processing
Another key area where AI can make a difference is claims processing. AI can help insurers identify fraudulent claims more quickly and accurately, reducing the costs associated with fraud and enabling insurers to process legitimate claims more quickly. This can improve the overall customer experience and increase the likelihood that customers will renew their policies.
Example: sprout.ai is building a platform that helps insurers deliver fast and accurate claims decisions. With the platform, insurers can process claims in minutes at a 97 per cent accuracy level.
Enabling personalised pricing
Traditionally, insurance policies have been priced based on broad risk categories. However, AI can enable insurers to price policies more accurately based on an individual’s specific risk profile. This can make insurance more affordable for low-risk individuals and businesses while still ensuring that high-risk individuals and businesses are adequately covered.
Example: Igloo Insure’s dynamic pricing model and real-time risk engine help businesses ensure that their customers enjoy competitive rates based on their risk profiles.
Also Read: Levelling the playing field: How AI can transform SME hiring
Enhancing customer engagement
Finally, AI can help insurers improve customer engagement by offering personalised recommendations and advice based on an individual’s specific needs and preferences. This can help insurers build stronger relationships with their customers and increase customer loyalty over time.
Example: Assurance IQ (acquired by Prudential Financial) uses AI to sell personalised insurance products. The company uses AI and data collection to make personalised recommendations based on general questions about medical and lifestyle habits.
Of course, there are also potential risks and challenges associated with the use of AI in the insurance industry, including issues related to data privacy, security, and bias. However, these challenges can be addressed through careful planning and the development of appropriate regulatory frameworks.
Ultimately, the benefits of AI in the insurance industry are too great to ignore. By leveraging the power of this transformative technology, we can increase insurance penetration, making insurance more accessible and affordable for everyone. This, in turn, can help mitigate the financial risks associated with unexpected events, promote economic stability, and improve the overall quality of life.
Parting thoughts
At Cathay Innovation, we’ve invested in startups around the globe, developing innovative solutions for the insurance industry from Coherent, Igloo, Lifepal and Yuanbao Insurance in Asia, Descartes Underwriting, Qover and Coverfy in Europe and Sidecar Health in the US.
We’re also backed by some of the largest financial institutions and insurers, such as BNP Paribas Cardif, who are not only investors but strategic partners closely working with us and our portfolio companies to bring innovation to life in the real world.
What’s become clear is that the potential of AI to increase insurance penetration is significant, and insurers that embrace this technology stand to gain a competitive advantage in the marketplace.
By improving risk assessment, enhancing underwriting efficiency, streamlining claims processing, enabling personalised pricing, and enhancing customer engagement, AI can help insurers create a more accessible, affordable, and personalised insurance experience for all.
Building in the space? Feel free to reach out.
—
Editor’s note: e27 aims to foster thought leadership by publishing views from the community. Share your opinion by submitting an article, video, podcast, or infographic
Join our e27 Telegram group, FB community, or like the e27 Facebook page
Image credit: Canva
This article was first published on August 22, 2023
The post AI’s transformative role: Making insurance accessible and affordable globally appeared first on e27.
