AI and process automation will consign old-fashioned auditing approaches to history.

Until recently, insurance has been characterised as traditional, risk-averse and slower than other sectors to adapt to innovation and change. However, technology is now playing an increasingly prominent role in insurance. In the past 12 months, the rise of Artificial Intelligence (AI) has signaled the dawn of a new age.

While computer systems have made inroads into the automotive insurance sector – especially where injury claims are concerned – questions remain about the best way to apply AI and machine learning in this hugely varied field.

The one issue on which virtually everyone agrees is that machine learning has begun to revolutionise insurance. “The industry resisted the onset of technology for quite a while,” says Nina Plail of Milliman, an expert in insurtech. “Then, all of a sudden, it’s like everyone got on board and now it’s almost the other extreme. Everyone is looking for the newest and best technology.”

The impact has been startling. “In the past, the industry thought we were doing a good job by settling an auto damage estimate within 30 days,” she adds. “Now with this new technology, we are looking at hours and, at the most, days. So it’s really a game changer.”

Data-driven solutions for efficiency

The potential here is huge, with benefits such as improved cost control, increased fraud detection, reduced claim life cycles and better customer outcomes.

Sofie Quidenus-Wahlforss, CEO and founder of insurance AI firm omni:us and one of Forbes’ Top 50 Women in Tech 2018, says: “Today’s customers expect more from their insurance company – they want products tailored to suit their needs and don’t want to wait weeks or even months for claims to be resolved.

Today’s customers expect more from their insurance company

“AI will make it possible for insurance companies to meet these changing expectations, in turn encouraging widespread interest, innovation and investment in the industry.

“Adopting a data-driven approach is the fundamental means for insurance companies, whatever their size, to stay competitive and there’s little doubt that effective implementation of AI technology will be crucial to business success and survival in 2019 and beyond.”

Augmenting human intelligence

AI and machine learning can help to revolutionise workflows by reading, understanding and extracting relevant information and automating certain claims management tasks – completing in minutes what may have previously taken weeks to do. In the process, AI becomes more informed and consistently learns based on the amount of information and data it is exposed to, so the system keeps improving.

A key benefit lies in AI’s ability to process vast swathes of unstructured data, recognising patterns and information that can help identify potentially problematic claims.

Yet this can only be achieved with the correct balance of machine and human. As Plail explains, the ideal system is complementary, with machines acting as supporters of experienced loss adjusters.

Insurance is more of an art than a science. You must take advantage of what technology has to offer, but this is seen through the eyes of a diverse team of experts.

Claims must be handled and administered in a way that an organisation can be profitable without cutting payouts to the point where customers can no longer see the benefits of buying insurance in the first place. This, crucially, requires human judgment. “Insurance is more of an art than a science,” says Plail. “You must take advantage of what technology has to offer, but this is seen through the eyes of a diverse team of experts. We take a 360-degree approach, and it works.

“We’re talking about leveraging all your assets, not falling into the trap of thinking AI will replace everything. Ultimately we sell insurance to people, not computers.”

As Alex Polyakov, CEO and founder of insurtech company Livegenic, puts it: “The most important metric in insurance, is customer satisfaction post claim.”

Insurtech pace of change increasing

For those not already converted, time is of the essence, since the pace of change shows no sign of slowing.

You have to embrace the revolution because it has only just begun

“At least for the next few years it is going to get even faster,” says Plail. “You can’t even get into the insurtech conferences now if you don’t sign up right away – they’re totally full. We’re not anywhere near the peak yet.

“It’s absolutely crucial to keep on top of it.

“The reality is that this is an ongoing challenge, not a one-time fix. You have to embrace the revolution because it has only just begun.”