Artificial Intelligence, which is popularly known as AI, is an extremely commonly used buzz word for the past few years in the insurance industry. As the name puts forward, “Artificial” is not “Natural / human”. But it is crucial to understand that Artificial Intelligence is a human-designed modelling and not a different system in itself.
AI is a logic used to learn from the past experiences of the available data and create intelligence from there as, by definition, Intelligence means the ability to gain and apply knowledge and skills.
So Artificial Intelligence AI is about repetitively and flawlessly aping human intelligence and knowledge based on experience and applying logic as it would have been used by a human being.
The various tools and applications of AI are:
- Machine Learning (ML),
- Natural Language Processing (NLP),
- Robotics Process Automation (RPA),
- Speech Recognition (SR),
- Vision Systems (including Face Recognition)
Machine Learning (ML) is about an application/logic that can mechanically learn on its own without being exclusively programmed to do like that. It learns from the past experiences and trends and actually improvises with the experience. AI and ML are the buzz words in the last few years and there are many myths and opinions about AI, ML etc. Though ML is an application of AI, which is nothing but just acquisition of knowledge or skill, it is very common and often used as a conjunction of AI in day to day communications.
“Indian companies are understand that they are sitting on a lot of data, and are looking at how to unlock it,” said Subram Natarajan, chief technology officer, IBM India and South Asia. Only 4% of India is insured, which means “there are plenty of opportunities to grow,” Natarajan said. According to a report by the Insurance Regulatory and Development Authority of India the life insurance sector in India was under 1% when the industry opened up to private players in 2001 which is still among the lowest worldwide.
A joint PwC-CII report has estimated that above 98% of life insurance policies are still sold directly and said that distribution partners will need to use technology to fit into a digital future. Insurers have launched mobile phone apps to make it easy for customers to transact with them. They are, slowly but surely, moving on the road to paperless claims as well. However, this is only the first step in digital transformation.
Changing core systems is an expensive and complicated task. Thus, most transformation initiatives majorly focus on improving systems of engagement with clients. Insurance companies are exclusive and private — most of the interactions with customers happen via agent. In effect, a large portion of technology investment goes into improving this agent experience.
Insurers have developed systems to advise agents on products personalized for specific customers, depending on their past purchase history with the insurer and income bandwidth. For eg.Bajaj Allianz Life Insurance has a mobile app to hire agents. This aids in training, exams and licensing too. It has brought on board 15,700 consultants digitally in the last year, thus cutting down processing time by 50 %.
Benefits of Digitalisation in Life insurance in India
- Encourages experimentation, control and discipline : Insurers must develop an acceptance for experimentation but combine that with rigorous measurement of ROI so that failures can be ended quickly and successful pilots can be moved into full implementation.
- Prepare business processes for digitization : Layering an AI solution on top of a poorly designed process will waste its potential. Insurers must first optimize the business process in the course of such approaches as system changes, standardization and consolidation of fragmented systems.
- Design responsible AI : Applications that make wrong or biased decisions can inflict major reputational damage and also loss of shareholder value. Yet, a AI study shows, only 41% of insurance executives said moral ethical considerations play a critical or significant role at their companies when they employ AI applications.
Just as companies have ethics officers, insurers will also need to establish AI ethics policies and procedures to make sure their applications are designed ethically and continue to function appropriately over time. Making the switch to an AI future is no longer an optional thing. The market won’t be gentle to companies that choose to sit on the sidelines and wait until the path forward comes into spotlight.
Introduction of AI in insurance
Technology has led to many positive uprisings around us and insurance industry is making the most of the latest technology to improve its functioning and services to clients.
Initially the insurance industry focused on the policy and product, whereas today the insurers are inclining more towards becoming a more customer-centric organizations and thus AI i.e. Artificial Intelligence have been at the forefront of this mission.
Using of AI in insurance has enhanced customer experience by
- Better understanding of customer behavior,
- Streamlining of the claim process,
- Improving underwriting and
- Preventing fraud if any.
- Effective customer engagement
- Penetration and simplifying of the customer services at various touch points.
AI can simplify and handle routine tasks effortlessly thus taking the insurer’s scope deeper in the market. Many industries are using AI to rationalize their operations and connect with their clients in a more effective manner.
Benefits of AI introduction in Life insurance in India
- Encourages experimentation, control and discipline thus ending failures quickly.
- Prepare business processes for digitization and optimize them.
- Design responsible AI and establish AI ethics policies and procedures to ensure their applications are designed to function appropriately.
Silent Features of AI in Insurance sector:
- Artificial Intelligence (AI) in a broader sense includes anything and everything.
- At core, an AI system is a soft-ware that implants (human) intelligence in machines. It allows systems to find solutions to problems on its.
- AI based processes generates better risk insights and thereby enhance decision-making capabilities.
- The self-learning capability of AI systems permits insurers to make new product offerings across different geographic areas and customer fragments.
- AI is best used for its efficiency improvement and process automation chiefly in customer facing, underwriting, and claim management processes.
However, due to increasing customer demands, AI will soon be forced in more complex tasks and the below mentioned areas will see its biggest impact:
- Algorithmic underwriting
- Intake management
- Personalized product offerings
- New product offerings
- Enhancing customer experience
- Empower human personnel
- Increasing operational efficiency
- Increasing operational efficiency