Subscribe to Our Blog
Efficiency and accuracy have always
been big objectives of business, specifically efficiency in customer service
and work processes. Artificial intelligence (AI) has proven helpful for
businesses looking to accomplish those objectives and, as a practice, has moved
to the forefront of many professional fields, including insurance. AI’s growing
implementation has the capacity to reshape the way we experience insurance –
and not just in expected ways, like enhanced mobile applications or written premiums
for newly automated vehicles.
One deeply affected area involves the
administrative side of insurance. Historically, even the simplest of claims could
take several days to process, and more complex claims could require substantial
human interaction. Advanced AI systems now route claims, increasing efficiency with
technology that helps identify and protect against fraudulent claims. The
expedited process from online interfaces, chat boxes and virtual claims
adjusters is drastically cutting administrative costs for insurers.
AI’s efficiency also cuts costs for
insurers by reducing needed staff, as it has the capability to provide around-the-clock
accessibility for insureds. Virtual call centers, online applications and
computer-generated advice allow for constant access to virtual insurance “agents,”
after business hours or on weekends. Not only does this 24/7 accessibility
provide more convenience and comfort to insureds than ever before, it has a
direct impact on the insurer’s bottom line.
there are clear benefits from an efficiency standpoint, it’s important to
consider how consumers will perceive these AI implementations. It raises some
interesting questions, and answers may be widespread. Would a younger
generation of consumers be more accepting and open to dealing with automated
responses and callers? Are older, less tech-savvy consumers more likely to take
exception to AI chat boxes and virtual call centers? Insurers are daunted with
the task of providing exceptional service for a wide array of individuals with
AI is already changing the way consumers
and insurers experience insurance. But what effect will AI have on actuaries?
First and foremost, actuaries will need to cultivate an innovative mindset as
they embark into new and uncharted territories. Whether implementation of rates
for fully autonomous vehicles, impact on cyber insurance premiums for companies
using AI for data collection, or advances in AI technology in senior care that
soften the commercial market, it is very likely that traditional actuarial
methods will need to be adjusted or examined through a different lens.
area where actuaries might see dramatic change is with paid and reported loss
patterns. Actuaries typically look at prior loss experience of a company at
various evaluation points, and attempt to extrapolate how new losses will
develop based on these selected patterns. If claim closing rates are
dramatically changed, the historical evaluation points may become less
predictive, posing challenges. It will be interesting to see how pooled loss
development from AI-driven companies (used as an industry benchmark) react as
AI becomes more common, and if this might be an area actuaries can lean on to
more accurately project losses of AI-driven clients.
AI is certainly here to stay, and insurers
will need to become comfortable with AI’s capabilities or run the risk of
falling behind competitors. Actuarial decision-making will be at the forefront as
companies approach this new element.
« Back to Blog