How insurers use AI to improve their practices
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The artificial intelligence revolution has changed the insurance industry, with insurers utilizing AI to streamline processes including claims, as well as to combat fraud.
There’s clearly room for AI to help with insurers’ operations. Capgemini research shows that underwriters spend 41% to 43% of their time completing administrative tasks, such as data entry and record keeping. This means that more time is spent on these manual processes than on core activities; only a third, 32% to 33%, of underwriters’ time is spent on essential responsibilities like risk assessment and premium calculation, and 25% to 26% is allotted to agent-broker collaboration and sales activities.
Organizations that implemented AI, including automated and data-driven underwriting decision-making, show significant gains in speed, reduced expenses and improved target achievement when compared to other insurers, according to Capgemini. These insurers also see improvement in fraud detection and managing the costs of losses.
Read more: AI is a top priority but preparedness lags for insurers
“One of the things that technology like artificial intelligence is doing is democratizing some of this knowledge,” Caroline Bedford, chief executive at EDII, said on an In Send webinar. “Clearly, human skills, emotional intelligence and face-to-face relationships are indispensable. Absolutely. But we now have really great language models that can be specific to your organization, that can share knowledge with graduates or with people who are building experience.”
AI-powered predictive models using photos of damage details from claims can predict losses more accurately and consistently, according to Don Jones, senior vice president, claims design and delivery at Allstate. For auto claims, this allows carriers to “get our customers back on the road faster, in terms of faster cycle times, more efficient processes, and making sure that we’re accurately managing their claim,” he added.
Read more: Utilizing digital solutions in the broker space and beyond
AI can help detect fraud in insurance, but this same technology can be used against insurers to submit fraudulent claims. Rather than using Gen AI to manipulate damage photos for claims, a bigger issue is its use for false identification of policyholders making claims. Synthetic IDs, which are fabricated identities that are not based on real people, are being used to make claims, Karen Jennings, a special investigations unit manager at American Family Insurance, told Digital Insurance’s Michael Shashoua.
“They’re misrepresenting their information to the insurance company to take out a policy, and then from there, depending on the carrier, either the claim is paid or they catch the red flags that it’s not an actual person,” Jennings said. “Each case is a different scenario.”
Read more about how the insurance industry is utilizing AI.
