Exploring Uses Cases for Artificial Intelligence in Commercial Insurance

Artificial Intelligence - May 29 2019

Every day there are 2.5 quintillion bytes of data created. This means that more data has been created in the last 10 years than in all of history. By 2025, IDC predicts annual data output of 163 zettabytes or one trillion gigabytes.  That’s a lot of data!

For industries that intake large amounts of data that must be accessed, reviewed, and analyzed in order to deliver high value services and/or products, the volume of data being generated is next to impossible to analyze quickly using traditional methods.

Industries like insurance who have relied on data collection since the dawn of time to assess risk, underwrite and price are now being challenged with how to access the data needed to make these informed decisions quickly and efficiently. Data is the lifeblood of insurance as underwriters heavily rely on statistical data to score risk based on a variety of factors such as proximity to natural disaster zones, building type, location, type of products and services being offered, security, assets, employee demographics, etc. Accessing the data needed to thoroughly assess risk has become more and more difficult as file stores, and data lakes are growing exponentially.

Much like other industries, the insurance industry is being challenged by market disruption thereby being forced to revisit age-old processes to meet customer demand. Just like other industries, insurers are finding themselves coping with greater demands for value-centric products and faster service. With information available on the internet 24/7/365, buyers have expectations for a frictionless insurance experience which includes quicker responses and products that meet new business models. As insurers drive digital transformation initiatives to evolve stagnant traditional risk models, adopting and deploying new technologies like Artificial Intelligence will enable them to elevate their capabilities to meet new demands and deliver a better customer experience.

Bleeding edge technologies like Artificial Intelligence can help insurers automate and streamline processes spanning across the entire value chain from sales and service, underwriting, distribution, etc., to deliver a better customer experience.

Leveraging Artificial Intelligence to automate underwriting enables both brokers and carriers to enjoy many business benefits including overall improvements in operational efficiencies. From cutting costs to decreasing quote to bind timelines, to mitigating E&O risk, to increasing premiums written to deepening customer relationships to delivering a complete omni-experience.

Deploying AI for Commercial Insurance Underwriting

Today, underwriters are spending an enormous amount of time on low value high volume tasks rather than spending their time on high value account management focused initiatives. With purpose-built AI solutions for commercial insurance that use Natural Language Processing and Machine Learning, commercial insurance brokers and carriers can augment their existing human workforce with digital employees to automate repetitive administrative workflows allowing skilled knowledge workers to focus on high value account management.

With AI platforms that support insurance-specific named entity recognition, insurance brokers and carriers can free trapped information locked away in data stores within seconds to enable informed decision making. Insurers can extract, interpret and classify unstructured data in insurance documents like policies, applications, binders, and quotes hundreds of times faster than a human with greater accuracy. Being able to extract and utilize more than 500 data entities allows for much better risk assessment, risk selection decisions, and underwriting judgements. With access to more information than ever before, determining premiums and being able to deliver competitive quotes is easier and faster.

For example, brokers who embrace AI solutions can conduct policy checks faster allowing them to spend more time talking to customers and writing more business with their existing headcount. Rather than manually comparing existing policies or binders against new policies to identify potential errors and omissions, brokers can use an auto-generated checklist to identify errors and omissions in less than three minutes. What once took hours or days, can now be done in minutes, freeing up knowledge workers to focus on customer-facing engagements, not administrative busy work.

In the case of a carrier, AI solutions can help them shape their book of business by automating and streamlining their submission triage process. For large carriers that can receive 10,000 submissions a day, attempting to manually review each risk and determine if they want to underwrite the business is extremely time consuming, not to mention costly, taking days and some cases weeks to respond resulting in lost business opportunities. AI allows carriers to automate the process eliminating the need for manual data entry into back end systems, data analysis and quote. The entire process can be shortened from weeks to one day and carriers can reduce costs by 80%. Even auto-decline emails can be sent immediately upon submission to improve the overall customer experience and keep the broker from wondering about the status for days or weeks. Being the first responder increases the odds of winning the business more than 50% of the time.

Summary

AI solutions offer a huge opportunity for insurers to increase underwriting quality and efficiency. Embracing new technologies also provides Underwriters the opportunity to extend their underwriting excellence into disciplines such as product development, portfolio management, pricing analytics or other management roles.

According to a report published by Accenture titled Future Workforce Survey Insurance: Realizing the Full Value of AI, insurers that invest in AI and human-machine collaboration the same rate as top-performing businesses could boost their revenue by an average 17%.

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