28th July, 2023

The use of artificial intelligence (AI) has rapidly grown over recent years and has been introduced in various industries, including insurance. In fact, research has found that one in six businesses across the UK (over 432,000!) have introduced at least one form of AI, and it has been implemented at a rate of 9% in areas such as data management and analysis.

As the use of artificial intelligence grows and develops, it can be used to help with the assessment of risk, processing claims and interacting with customers, all of which could ultimately lead to better accuracy in policy pricing, customer experience improvements and streamlined business operations.

However, there’s a number of reservations when it comes to AI and questions of whether it could lead to more harm than good. So, just how could artificial intelligence impact the insurance industry?

One of the most common ways that AI has affected the insurance industry is through the improved customer experience of actually purchasing a policy, given that the need for long – and sometimes complicated – forms is removed. Not to mention the fact that most website browsers are now able to remember and store information so that it can be used again in other form submissions, so having to repeat data such as a postal address or phone number is no longer necessary.

It’s also quicker to receive a quote and then purchase the policy, as the information is processed by AI at a rate much faster than that of a human agent.

The development of AI could lend a huge help to more efficiently assessing claims. With the introduction of sensors and chips that are now being installed in many hybrid, electric and autonomous (self-driving) vehicles, claims management companies could have access to more resources that can allow them to assess information such as the speed of the vehicle or how harshly they came to a stop on the road. Not to mention that these sensors and chips could also help to reduce how often accidents happen, or even the severity of the accident.

Further to this, the use of AI such as drones could help to inspect the likes of infrastructure or hard-to-reach areas to support the assessment of a claim. Image recognition technology can also be used to inspect damages, whilst the likes of machine learning algorithms could help to detect and prevent fraudulent claims.

These technologies can also be used for more than just claims processing, such as detecting a fraudulent insurance policy application.

As a result of the AI boom, more people are storing their data digitally through the use of computers, smartphones, and smartwatches, to name a few. When done correctly and ethically, businesses can collect and analyse this information to gain a better understanding of how their customers behave. For an insurer, this data can be utilised for improve accuracy in assessing a customer’s risk profile, leading to better pricing structures, and tailoring of policies.

Plus, this newfound knowledge of a customer can better clarify their wants and needs, helping to build a more innovative market that develops new products and services to suit the consumer.

Developing cognitive technologies, also known as ‘thinking’ technologies, can aid the insurance industry in the automation of tasks such as data analysis and claims processing, allowing the ‘human resources’ to focus on tasks that AI simply cannot complete as they require human judgement and empathy. These cognitive technologies include the likes of natural language processing, machine learning and algorithms.

However, for all of the benefits there will of course be some downfalls. One of the biggest worries when it comes to the use of AI is that it will replace the need for humans in certain areas of the job, leading to workers being removed from their roles and therefore increasing rates of unemployment.

There is also the very real possibility that this type of technologies could be abused, such as tracking people’s movements unnecessarily (and sometimes illegally), or the unethical collection of peoples data. Similarly, there are questions over data protection and the right to confidentiality, given that AI stores data on a server that can be accessed by many people – or even hacked.

Other concerns over the increased use of AI include the costs associated with implementing such technologies, lack of creativity, and the potential for humans to rely on them a little too much.

There is still so much that can be done with artificial intelligence. But, as with anything, it’s important to consider all of the possibilities – good and bad.


Written by: Shannan Errington

*Please note that the above information has been gathered through secondary research. The information provided is not based on our opinion. You should seek further guidance and information before making an informed decision.

Sources:
https://www.analyticsinsight.net/ai-growth-and-adoption-in-the-uk-2023/
https://inszoneinsurance.com/ai-the-future-of-insurance
https://www.ibm.com/blog/the-risks-and-limitations-of-ai-in-insurance/