From technology innovation to insurance startups, insurance AI (or artificial intelligence) is starting to pepper the insurtech landscape with process ideas and efficiency improvements. These technologies are transforming the insurance industry with insurance carriers, brokers, and agents adopting these technologies and becoming more digital.
Insurance AI and other insurtech solutions make it possible for these groups to:
- Market and sell insurance online
- Interact with customers virtually
- Automate aspects of underwriting and claims management
And this is just the start. Rapid innovation in AI means the insurance industry could increasingly have more attainable ways to increase automation and create stronger businesses.
“AI will disrupt distribution, underwriting, claims, and service as core processes become AI-enabled, creating a ‘human in the loop’ model that increases productivity and allows for higher-quality touchpoints with customers,” says McKinsey.
In this article, we’ll take a closer look at how AI is changing the insurance industry and examine what that means for insurance agents.
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How Is AI Changing the Insurance Industry?
Insurance AI is changing the industry across the board. The evolution isn’t happening overnight, but it’s well underway. And the potential for better decision-making, efficiency, and increased cost savings cannot be ignored.
“It is currently used in claims processing, underwriting, fraud detection, and customer service. Moreover, insurers are sitting on a treasure-trove of big data, the main ingredient AI requires to be successful.”National Association of Insurance Commissioners
So, as NAIC explains, big data is used by AI to provide benefits like:
- Better customer engagement
- Increased personalization
- More accurate customer targeting
“In the insurance industry, manual processes simply can’t scale alongside the scope and speed of business growth. So to get smarter about their knowledge management and big data processing approaches, insurers are implementing artificial intelligence (AI) across their operations to create better, personalized experiences for their employees and clients,” notes IBM.
AI is also changing the insurance industry in areas like risk management and compliance. For example, insurers can use AI to make more comprehensive underwriting decisions based on a wider range of information.
“Until now, ‘unstructured data’—such as social media posts, letters, voice recordings, and more—has required manual parsing, meaning its use has been primarily limited to assessing individual cases rather than predicting risk,” explains Emeritus. Yet branches of AI like natural language processing “have allowed actuaries to delve into this data on a much broader level.”
What Does AI Mean for Insurance Agents?
As these changes within the insurance industry take place, insurance agents will have more opportunities to improve their businesses. In some cases, carriers investing in AI will ultimately help agents. In other cases, agencies themselves will invest in AI tools that help them run better businesses.
And even though AI can be complex, you don’t always have to be a tech expert to use it. Artificial intelligence already exists in a variety of hardware and software tools that you currently use. For example, if you play music in your office using a speaker that has Amazon Alexa capabilities, then you’re already benefiting from AI.
Plus, AI can help insurance agents:
Improve Sales and Marketing
AI tools can help insurance agents analyze data and make predictions. That can lead to stronger sales and marketing efforts.
For example, insurance AI can help insurers identify customers at risk of not renewing their policies. In that case, insurance agents might decide to put more time into convincing these customers to renew.
Or, if some customers can’t be persuaded, then insurance agents might double down on those who are already likely to renew. By building stronger relationships with these loyal customers, insurance agents can reap benefits like more referrals.
AI can also help when it comes to more personalized marketing. Instead of sending the same messages to every prospect, AI can facilitate more unique approaches. This doesn’t have to be limited to insurance industry technology. Agents can tap into broader tools that help make marketing more targeted.
“AI techniques can be used to create 1:1 personalization of content that matches the right content with the right customer at the right time. AI models can use a broad set of signals about customer intent including real-time behaviors, prior purchases, preferences, and interests of similar customers.”H20.ai, an AI platform provider
Enhance Customer Experience
As a whole, insurance agencies have become more digital over the years, such as when it comes to interacting with prospects and customers.
“What once appeared to be a distant goal for insurance agent organizations—seamless virtual interactions with customers—has become a standard expectation among consumers and thus more urgent for insurers to deliver,” notes Bain & Company.
That doesn’t mean that insurance agents have to rely 100% on online interactions. Many customers still appreciate a more personal approach. But insurance agents can use AI technologies to streamline these interactions, such as by adding AI chatbots to help customers who have quick, straightforward questions. Then, those who need more nuanced help can be directed to personal support from an agent.
AI can also improve customer experience when agents use technology to increase efficiency. By quickly analyzing large quantities of data for underwriting decisions, insurers can do more than improve risk management. They can also decrease wait times on these decisions. So, agents that tap into these technologies, including by partnering with brokers and carriers who use AI tools, can deliver a better customer experience.
Insurance agents can also use AI to streamline operations. From accounting to cybersecurity, AI can be used to help everything run smoothly in the background. That way, you can spend more time on the client-facing aspects of your business.
Perhaps you spend a lot of time managing your agency expenses. AI can streamline that by automatically categorizing your spending. You could even use AI to help you create financial forecasts so you have a better idea of where to cut spending and/or where to focus on revenue growth.
AI can also help your agency’s IT management. Your expertise is in insurance, not troubleshooting computer issues. You still might want to work with an IT expert, especially as you grow. But AI can power software that helps with things like identifying and blocking cyber threats.
Insurance AI and the future of commercial insurance
The commercial insurance industry is already benefitting from the advancements in technology, particularly when it comes to increasing efficiency. It only stands to reason that AI will continue to improve efficiencies, as well as replace tasks humans do want to do or are too time-consuming for them to perform.
However, we need not be afraid of technology or how AI will affect jobs or the interaction with clients. While insurance AI is still in its infancy, there is a lot to be gained from introducing and trying new tech. Not to mention, clients are increasingly expecting greater access and less friction to the products and services they want. Overall, insurance agents and the broader insurance industry have a lot to gain from AI.
Insurers that invest significantly in AI have started to see benefits like “increasing net new business by 20% to 25% and reducing loss ratios by 2 to 3 percentage points, thanks to improved underwriting and claims excellence. The most digitally mature companies already outperform their peers, particularly in the areas of revenue growth, enterprise value, and gaining ROI from digital projects,” according to Boston Consulting Group.
In other words, it often pays off for insurance businesses to invest in AI. So, insurance agents and others in the industry should consider ways to add AI and other digital technologies to their businesses. Doing so can help you get ahead of competitors.