Artificial Intelligence: An answer for Insurance Claim Management?
Artificial Intelligence (AI) is much more than a buzz word in the insurance industry. AI has promoted changes across the industry in various practices:
- Chatbots.
- Claim Management.
- Evidence Gathering for Auto and Health Insurance via wearables.
- Telematic Devices.
- Massive Data Production and Analysis, and more.
Changes brought by AI are not only being adopted in the industry, but they are also changing insurance permanently. But before digging deeper into this subject, let us ask the question:
What Is Artificial Intelligence?
According to the National Association Of Insurance Commissioners (NAIC), “Artificial Intelligence is a technology which enables computer systems to accomplish tasks that typically require a human’s intelligent behavior. Examples include gathering information, analyzing data by running a model, and making decisions.”
The NAIC also highlights that the use of AI has increased across all industries in the past years. This was a result of the pandemic in 2020, as it forced everyone from industry leaders to small business to move to a digital paradigm. According to NAIC, “The rise in accessible data, increased computing capabilities, and changing consumer expectations has led to a strong acceleration of AI development. Consequently, AI is rapidly evolving and creating viable opportunities for business growth. It is disrupting and improving organizations across all industries, including insurance.”
How Is It Different From Machine Learning?
Machine learning is a part of any Artificial Intelligence. It allows an artificially intelligent machine to automatically learn from past data without programming explicitly. The goal of Machine Learning is to allow machines to learn from data so that they can give accurate output: how to recognize events, patterns, people or events in pictures, errors in documents, and so on. The problem with machine learning is that is has a limited scope, it is directed at one task or one set of tasks.
Artificial intelligence is broader, it complements machine learning in a way that AI works to create intelligent systems which can perform various complex tasks. While machine learning is based on the idea that machines should be able to learn and adapt through experience, AI refers to a broader idea where machines can execute tasks “smartly.”
Why Has Artificial Intelligence Gained Traction in The Insurance Industry?
The scope of tasks that artificial intelligence can perform is yet to be exhausted. Artificial intelligence has the potential to change the insurance industry completely and make it go from its current state of “detect and repair” to “predict and prevent.”
As of today, the insurance industry has adopted Artificial Intelligence in many ways to help improve productivity. It has also allowed insurers to take a step further toward better underwriting, profitability, and general time saving. Some of the biggest applications of AI in the insurance industry are:
- Fraud Detection: To combat fraud, insurers are using AI-driven predictive analytics software to process thousands of claims each month. They analyze claims based on a set of rules and indicators, and AI identifies patterns and irregular behaviors that is illegitimate. This lowers fraudulent claims to a minimum.
- Composition of Personas: Through segmentation and profiling insurers can draw insights from internal customer data and AI can provide customer profiles. These are based on personal characteristics, interests, behaviors, life stages, and their insurance needs. With such insights, insurers can then decide the relevant product recommendations for each customer segment.
- Underwriting: Insurers can now count on advanced analytics to get a comprehensive view of risk and underwrite policies according to the insured’s individual and unique needs.
- Data provider: AI is also present in many of the device’s insureds use every day. From telematic devices in their car, to wearables that hub their health-related data, Artificial Intelligence produces hundreds of terabytes of data every day.
- Data Analyzing and Report Generation: AI is also able to process data and generate reports. These reports help insurers understand more comprehensively what their insured’s needs are.
As stated before, these are only the major changes AI is making in the industry. There are several smaller applications of AI that are just as useful and time saving. For example, automated reminders on claim management software that allows the insurer to forget the nagging voice in their head saying, “you have to message this person today.” With this technology, AI will be able to send the message for you.
The same goes for Optical Character Recognition (OCR). Optical Character Recognition is a product of machine learning, which teaches a program to recognize alphanumeric characters and imitate them. Each time an insurer runs a document through an OCR interface, the program learns more about how letters and numbers look. Once a machine understands what it is looking at, it can completely scan a document and reproduce it with little margin of error. OCR drastically reduces manual data entry, which saves enormous amounts of time.
Finally, Artificial Intelligence is also serving a purpose on augmented reality. Augmented reality uses artificial intelligence to analyze surroundings and generate a “digital overlay” with different options to “expand” on reality. For example, augmented reality could display statistics of a car accident on a cellphone screen. What artificial intelligence does in this case is help the augmented reality framework correctly display what actions are available depending on the environment.
A Claim Management Tool With Artificial Intelligence
Insurtechs are making the biggest bets towards innovation. TerraClaim is a result of that bet on innovation. That is why the software counts on a strong artificial intelligence interface that allows for report generation on claim statistics, data analysis, automations and automated reminders.
See TerraClaim in action for yourself by requesting a demo today.
