Get Protection + Monthly Income after Retirement

Six key areas benefiting from the adoption of AI in insurance

Dec 27, 2019 | 3 months ago | Read Time: 3 minutes | By iKnowledge Team
Six key areas benefiting from the adoption of AI in insurance

Imagine a scenario where you talk to your mobile device – or any kind of communication device for that matter – chatting to it about your lifestyle, your expectations, your apprehensions, your goals, your desires, explainining your current situation to it – and the device came up with solutions and told you exactly what to do with your money and where to invest it.

Sounds like science fiction? Well, no, that would be you experiencing artificial intelligence (AI). AI consists of combining data with machine learning and using combination to infuse artificial intelligence in machines or devices (or robots, if you please), who replicate human intelligence but do it much faster (because they are machines) and do it more objectively because they are unclouded by human emotions.

The adoption of AI in the financial services sector has been rising gradually and in recent years it has picked up pace. People want to do things fast and do not want to spend time visiting a bank, paying a bill, or moving money when they could be better employed doing something productive.

The Insurance industry is gradually looking to adopt AI to help better customer solutions. Let us look at the various areas where AI can have beneficial effects in the insurance sector:

1. Risk tolerance calculations: What is life insurance? It is primarily about managing risk. AI can help in assessment of the impact of risks based on claims and events data, their implications, and whether they can be mitigated. This allows insurance companies to charge premiums based on a more precise calculation of risks faced. The benefit of this is that it allows individuals at a lower risk to get premiums that are appropriate to their risk profile. Technologies such as telematics in motor insurance for instance, allow you to analyze a large quantity of data on driving behaviour to assess how risky an individual’s driving is, and provide adjust premiums accordingly. This rewards good behaviour while providing a financial incentive to drive better.

2. Offering better investments choices based on preference, risks and spending patterns: Insurance products have a long lifecycle and changes come after several years. AI can help in tracking changing lifestyle patterns and preferences and this can be incorporated into devising products and life insurance policies. This will ensure that customers are getting what they need, rather than selecting the product, which they feel, is closest to what they need.It helps if life insurance plans can be flexible to suit a customer’s needs.

3. Cost reduction and Customer focus:  Customers need to feel that they are cared for and that the company with whom they are doing business has their best interests. With technology and adopting practices that are process oriented (this is much better than a human who is selling because he/she is going to get high commissions), this can be achieved while also reducing costs. Digitalisation and reduction of individuals involved in the distribution cycle helps to lower costs, the benefits of which are passed down to customers.

4. Customer Relationship Management: The competition is not only in acquiring customers but also in retaining them and this customer loyalty is important. Persistency ratios are crucial. Given the long lifecycle of an insurance product, it is essential to sustain the customer relationship over a longer period. Traditionally, a larger workforce was required to help maintain these customer relationships. However, AI is helping drive automation here. Reminders and automated, customised customer communication keep the customer updated on upcoming insurance payments, missed insurance payments and other critical communication essential to keeping the relationship alive.

5. Challenges and future potential: A PwC study on AI[1] found that globally insurance CEOs were quite happy to embrace AI, which could help them to innovate on products and thus drive revenues and profitability. According to the report, “Thinking about their people strategy for the digital age, more than half of insurance CEOs are clear about how robotics and artificial intelligence can improve the customer experience.”

6. Fraud prevention: Reducing fraudulent insurance claims is important for the health of the industry in general and helps honest customers by helping to keep overall costs down. A French fintech company has incorporated machine learning algorithms on claims data. Having processed over 77 million claims, the cognitive machine learning algorithms have reached a 75% accuracy in flagging claims that have signs of fraud [2]. Such algorithms also help increase trust for honest customers, enabling insurance companies to process their claims faster.

The right use of technology such as Artificial Intelligence will be a boon for the insurance industry and will help it reduce costs for users while providing better customer service. To know about Aegon Life Insurance products like term insurance and other products, visit our home page.

Citations:

[1] PwC CEO Survey, 2018

https://www.pwc.de/de/finanzdienstleistungen/pwc-ceo-survey-2018-insurance-final.pdf

 [2] https://insights.samsung.com/2017/06/06/insurance-fraud-prevention-gets-a-little-help-from-artificial-intelligence/


PRODUCTS

iTerm Plan

Life Insurance Plan with 3 Options to Choose from

  • Life Protect (Life cover till age 100 years)
  • Protect Plus (5% Automatic Increase of life cover)
  • Dual Protect (Protection + Regular Income)
iTerm Plus Plan

Life Insurance Plan with 4 Options to Choose from

  • Life Plan
  • Life Plus Plan
  • Life & Health Plan (10 Critical Illnesses covered)
  • Life & Health Plus Plan (36 Critical Illnesses covered)
iInvest Plan

iInvest Plan with 3 Options to Choose from

  • Increases Your Investment
  • Boost Your Fund Value
  • Withdraw Your Investment
Prev
Five things to know when considering a career as an actuary
Next
Which are the most important stock markets in the world?
Secure Your Liabilities Now. Calculate your Premium!
Gender
Do You Smoke?

Date of Birth

Your Monthly Premium for Aegon Life iTerm Insurance Plan

RELATED ARTICLES