The insurance industry has had a tough time of it lately. With the introduction and growth of fintech companies, they’ve been put under a great deal of pressure to try and beat competition in a way they’re simply not set up to do.
Fintech companies offer customers the same of very similar products to that of traditional financial institutions yet they do it through the use of some of the more modern, advanced, artificial intelligence (AI) technologies available. A Pricewaterhouse Coopers survey conducted last year revealed that as many as 65% of insurance chief executives see startups as a real threat to growth. But, an even higher percentage (69%) were worried about the speed of technological change that was happening within the industry.
With so much data available, it’s the perfect time for insurance companies to embrace these technological changes and incorporate AI into their businesses. According to newspaper, The Economist, the ‘world’s most valuable resource is no longer oil. but data’. Because times have changed and people have a tendency to buy online now, the amount of data available to companies within the insurance industry will just keep expanding. This data is an asset and an insight that if used correctly would enable insurers to really understand their customers needs and deal with any problems before they arise.
One of the major problems insurance companies face currently with this much data is managing it. Although most businesses these days use customer relationship management (CRM) systems to manage their customer’s data, it’s just not enough. With the introduction of AI insurers get maximum value they can from this data. AI can sort through unstructured data more efficient than any human or team of humans. The first place insures should start when looking to integrate AI into their business models is machine learning.
Using machine learning to effectively and systematically order unstructured data will significantly help insurers better understand their customers and what they want. It will also help them improve their underwriting techniques too. Traditionally, underwriting policies takes time and is a costly process. However, through the use of AI, it doesn’t have to be. AI can scan unstructured data to extract any relevant information needed in which to analyse the risk, helping to protect insurers from taking on adverse risks.
The claims process will also benefit from the use of AI and will become a much more streamlined and quicker process for the client. These are just a few of the changes that are afoot within the industry. Many more are sure to follow.