AI for insurance companies to overcome long-overdue challenges

Every day, Artificial Intelligence (AI) expands its horizons daily across different industries. The insurance industry is no exception. With tight competition and dynamic market conditions, insurance companies take proactive measures to innovate, improvise, and meet customer expectations. 

As per KPMG, over 70% of CEOs chose to invest in Generative AI to help their businesses grow ahead of their competition. This blog explores how AI for insurance can be a game changer for companies.

Challenges Faced by Insurance Companies

94% of leaders share that AI is vital to their company’s success regardless of the industry. However, for insurance companies, AI might just be the need of the hour. There are several critical bottlenecks within the insurance industry, as covered below:

• Legacy solutions & manual dependencies

The insurance industry requires a great deal of manual effort. Insurance agents manage almost all operations manually, from sales to claim processing. This can lead to human errors, limited scalability, and inconsistent quality of service.

Legacy solutions like rule-based chatbots have served their purpose so far. However, customers now demand more with personalization and effective customer service. It’s about time for insurance companies to resort to a better solution.

• Agent retention & training

Sadly, the insurance industry has one of the most critical attrition ratios. According to surveys, almost 30% of new insurance agents give up their role within the period of three months. Moreover, 87% of them either shift to another company or quit the insurance industry in just three years. 

Stats demonstrate how insurance companies suffer huge losses due to recruitment costs, training expenses, inconsistent quality of service, and the loss of experienced agents. These losses pose a great threat and can hold back insurance companies. 

• Compromised customer experience

Even with such a vast burden on agents and manual support, the overall customer experience still suffers. Longer queues, lack of digital accessibility, and poor personalization still affect insurance customers. Improving customer experience could help companies get an edge over their competitors. 

• Keeping up with regulatory compliances

Different insurers offer different insurance products. Based on what they insure, there are unique regulatory compliances that companies must follow. These compliances keep on updating from time to time, and insurance companies need to keep up with them. 

To do so, insurance companies must effectively educate agents as needed. If agents falsely comprehend regulatory compliance, the company can face legal liabilities.

So, to summarize, there are a handful of challenges, and the insurance industry needs to advance through a technological transformation. That’s where AI can help.

How can AI help Insurance Companies?

AI has grown in different areas over time. Different subdomains of AI can offer direct advantages to insurance companies. Here are the AI/ML technologies that would change the insurance industry:

• Natural language processing (NLP)

Natural language processing and Natural language understanding are part of conversational AI. Conversational AI is the key to AI virtual agents and chatbots communicating with the customers all by themselves.

• Generative AI

Generative AI’s ability to create text, documentation, and images can be a great advantage to insurance agents as it can help draft responses, solutions, and even collateral documents when needed.

• Sentiment analysis

More than just communicating, AI can dive deeper into customers’ sentiments and understand how they are feeling through ML algorithms that are trained upon specific datasets or set rule-based lexicons.

• Recommendation engine

A pre-trained AI model can help offer customers personalized solutions. A recommendation engine can analyze customer queries and relate them to customer history to suggest the right solution to AI agents. 

• Reinforcement learning

Reinforcement learning in AI can help insurance companies improvise their solutions and offerings based on the dynamic insurance industry landscape.

• Computer Vision Optical character recognition

Lastly, AI can help process documentation, queries, and evidence through computer vision. It could reduce the turnaround time and manual efforts for human agents in the insurance industry.

Applications of AI in the insurance industry

Based on the discussed AI technologies, there are several ways AI can be integral to insurance workflows, including sales, customer service, claim processing, etc.

• AI chatbot support

AI chatbots can be the driving force behind the transformation of customer satisfaction and retention in the insurance industry. AI agents can answer customer queries and concerns right away with scalability and personalization.

Through AI assistants, insurance companies can offer instant customer engagement and self-support to customers. This could translate into better sales conversion and allow agents to focus on complex queries. 

• AI sales assistance for agents

AI can help insurance agents through their training and day-to-day execution. AI can assist agents with guidance and recommendations through customer calls and claim processing. Such AI assistance reduces ramp-up time for new agents and improves overall productivity.

• AI-enabled sales calls

AI can help before, during, and after the sales calls to improve the overall sales conversion ratio. AI can help collect customer requirements, fetch information from CRM, and provide pointers to sales reps to prepare them for calls. 

Such a tool can help transcribe calls, summarize discussions, and analyze conversations during the call to improve overall sales call conversion. Moreover, AI can also assist in follow-up activities after a call, such as drafting emails, supplementing collaterals, and creating documents.

• AI claim Processing

Claim processing is the major operation for insurance companies, which makes up for the quality of their offering and customer experience. AI can make claim processing quicker, easier, and more accurate. AI can be used to automate data entry, detect any fraud or discrepancies, and accelerate sales settlements.

AI can benefit all the stakeholders in the insurance industry, including the customers, AI agents, and insurance companies. These use cases of AI can help insurance companies overcome their challenges and limitations.

AI hallucinations: the key concern with AI in insurance

AI hallucination is the key challenge when it comes to applying AI models into practice. Hallucinations lead models to incorrect conclusions which could be troublesome in the insurance industry. From risk assessment to claim processing, hallucinations could lead to liabilities and regulatory challenges.

If leveraged in the insurance industry, AI models must be tested and calibrated with necessary human oversight.

Conclusion

The insurance industry is dynamic, and it has struggled long enough to deal with staff attrition, customer churn rate, and growing competition. The advancements of AI in the insurance sector can ease the job for insurance agents, improving attrition. Likewise, it can provide better customer experience and sales conversions to insurance companies can gain new customers easily while retaining existing ones.

It’s safe to say that, over the years, AI will help insurance companies improve their day-to-day operations and innovate their approach towards clients.