Auto insurance is reaping the benefits of artificial intelligence.
The applications for artificial intelligence in insurance are multifaceted—companies can gain better claims data, automate critical activities, and even transform the way they assess risk.
The insights insurers can gather are unparalleled, and wise companies will take notice of these insurtech opportunities. They can boost GWP, improve the loss ratio, and help run a tighter operation.
Let’s take a look at some of the best use cases for artificial intelligence in insurance.
How artificial intelligence can help auto insurance companies
There is no single goal for implementing artificial intelligence—every company can benefit in different ways we see use of ai in insurance industry. Here are a few of the most common ways artificial intelligence in insurance can improve the way things are done:
- More Efficient: Creating a more streamlined operation.
- Faster: Speeding up formally manual operations.
- Smarter: Handling tasks that once required human oversight.
- Less error-prone: Eliminating manual errors
What does that look like on a case-by-case basis?
Collecting real-time data
Prior to artificial intelligence, auto insurance companies still collected driver data. The problem wasn’t collection—it was processing the sheer volumes of data.
Consider the telematics data from a driver’s phone. How much of the data is actually meaningful or useful? Even the most conservative estimates will be well under 5%. But trying to process and understand what’s valuable and what’s not from thousands (or millions) is a daunting task, and would be impossible to manage with sheer human resources alone.
The difference that artificial intelligence in insurance makes is that you not only get data as it happens on the road—it’s delivered in a format you can understand.
This is beneficial because it significantly speeds up processes, like underwriting and claims.
Automating critical activities
Customer claims, requests, handling…the list goes on. Right now, most insurance companies process these things manually.
However, according to McKinsey & Company, the industry is moving in a smarter and more efficient direction. They believe over half of all claims will be automated by 2030. The goal is to “achieve straight-through processing rates of more than 90%.”
Where claims used to take days to process, automation will allow them to be resolved in minutes.
Behavioural insights from artificial intelligence
Artificial intelligence can detect patterns in behaviour. That behaviour can be driver behaviour, customer behaviour, or any behaviour that could lead to business-changing insights.
With artificial intelligence in insurance, you can find patterns you might have otherwise missed and make smarter, data-driven decisions. That may help you to price insurance differently or understand where there are deficiencies in your marketing or sales strategies.
Insurance requires processing a lot of documentation, much of which has to be manually reviewed to check for accuracy or to be compared with other documents.
However, with document intelligence, artificial intelligence can review and compare documents without any manual intervention. This can not only save hours of effort, but it can also significantly reduce human error.
And while all of these applications are powerful additions to any insurance company, the most powerful thing is risk mitigation.
Risk mitigation with artificial intelligence in insurance
The McKinsey & Company study also references a fictional driver in 2030 called Scott. They imagine what it looks like with Scott, using usage-based insurance (UBI) type program:
“Scott’s personal assistant maps out a potential route and shares it with his mobility insurer, which immediately responds with an alternate route that has a much lower likelihood of accidents and auto damage as well as the calculated adjustment to his monthly premium. Scott’s assistant notifies him that his mobility insurance premium will increase by 4 to 8 percent based on the route he selects and the volume and distribution of other cars on the road…The additional amounts are automatically debited from his bank account.”
This is a powerful vision for the future—understanding the nuances of every route so that he can understand his risk on a road-by-road basis. This will keep Scott safer and help insurance companies price their risk better.
In reality, however, this is not some sci-fi fantasy. In fact, it exists today. We do it every day.
Our use of artificial intelligence in insurance was focused on understanding “external” risk. While the driver’s existential risk is important (how good/bad of a driver they are, etc.), external risk applies to everyone on the road.
Consider factors like the current weather, shape of the road, traffic patterns, wind speed…the list goes on. We’ve created a proprietary risk engine that evaluates 85 external factors in order to find the “true price of risk.”
It’s so reliable, that we can actually predict the likelihood of accidents, with up to 86% accuracy. This is the power of artificial intelligence in insurance.
Artificial intelligence can change your insurance company
Curious about the applications of artificial intelligence in insurance for your company? We should talk.
At Inaza, we have a plug-and-play platform that can give you powerful insights into your drivers’ risk. And that’s just scratching the surface of what we can do.