Love at First (In)sight: Why P&C Insurance Companies Are Falling for AI

Artificial Intelligence - February 12 2020

With Valentine’s Day coming up, we thought it would be a good time to look at why P&C insurance companies are falling head over heels for artificial intelligence. Let’s face it: the insurance industry has a reputation for playing shy when it comes to embracing new technologies, but AI is proving impossible to resist. A July 2018 Accenture study reported that more than half of insurers nationwide were already using intelligent solutions in one or more of their business processes. Here’s why traditionally risk-averse insurance companies are coming out of their shells and putting their hearts (and budgets) on the line for AI.         

As an industry, insurance no longer has the luxury of continuing to conduct business as usual. The business landscape is evolving rapidly. New risks such as cyber and climate change, new incumbents, emerging distribution channels, rising customer expectations, and new opportunities such as insuring the gig economy are compelling insurance companies to evolve stagnant business processes. Traditional insurance giants who once dominated the industry are being forced to deliver new product lines and new on-demand digital offerings to serve customers faster and remain competitive.

To digitally transform customer-facing and back-office processes, achieve straight-through processing, accelerate quote-to-bind, and deliver a better customer experience, insurers are getting back on the dating market and courting InsurTechs and technology providers to find the right match.

Trending AI Uses Cases in Commercial Insurance

Greater access to key internal and external data. With the ability to automatically extract and classify data from unstructured and structured insurance documents such as policies, quotes, submissions, applications, binders and others, underwriters and analysts have more insights for better informed risk assessment and pricing. Equipped with external data insights such as property analytics provided by vendors like and Location Inc., underwriters now have access to intelligence relating to property risk from catastrophes like floods and wildfires. Whether the asset is a stock portfolio, a bond, a building or a cargo ship, underwriters now have immediate access to multiple internal and external data points to accurately assess and price the risk. AI gives insurance companies the power to maximize the value of their data across the entire underwriting process.

Accelerate underwriting procedures. By automating the knockout or underwriting rules applied during the commercial insurance submission process, insurance carriers can quickly identify the best business to write. Automation also allows them to deliver quotes to distributors and brokers faster, ultimately accelerating response times for policyholders. Brokers can speed up the quote-to-bind process and spend more time providing customer advice by using AI-based technologies that enable them to digitally compare multiple carrier quotes in seconds.

“The underwriter of the future is going to be much more data and analytic driven than they are even today. You see that happening right in front of us in the industry. And so, it’s going to be a much more tech-driven role as we move forward,” stated Kirstin Marr, President, Insurity Valen Analytics.

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Enhance the insurance buying process. Remove the inconvenience and costs associated with delivering on contract certainty by automating the processing and validation of carrier policies against sources of truth such as binders or submissions. Digitally compare multiple documents, such as a renewal versus a current policy, or a new policy versus the binder, eliminating the need for knowledge workers to spend countless hours manually scouring pages upon pages of documentation to identify potential errors and omissions. By using AI, brokers and carriers can proactively mitigate risk and free up time for experienced knowledge workers to focus on improving the customer experience (CX) including providing consistent, timely customer advice.

“Among the many technology trends shaping 2019 and beyond, the adoption of AI when it comes to CX is one of the most exciting,” says Jessica Ekholm, VP Analyst, Gartner. “The use of AI technologies such as machine learning, natural-language understanding and natural-language processing can help analyze customer sentiment and customer feedback at a scale, precision and speed not achievable through humans.”

Fast track claims management and administration. Intelligent solutions make it more efficient to settle and pay claims by leveraging data analytics to automate fraud detection. Click-Ins uses a combination of AI, Deep Learning, photogrammetry, 3D modeling, applied mathematics, and computer vision to inspect vehicles and detect damages with just a click of any digital camera.

According to a recent LexisNexis Risk Solutions report titled Hype or Reality: The State of Artificial Intelligence and Machine Learning in the Insurance Industry, 88% of the adopters of AI and ML investments are already seeing the benefit of faster claims settlement.

Sales enablement and chatbots. According to an Accenture survey, 68% of respondents in the insurance industry use chatbots in some segment of their business. Chatbots often act as smart assistants engaging with customers online and expanding the interaction window from 8 to 10 hours to 24 hours a day. They enable insurance companies to address customer inquiries on their terms and reach potential new customers at a fraction of the cost. Chatbots from Next, sell commercial insurance to personal trainers via Facebook Messenger.

Spending on AI systems is expected to reach $49.2 billion in 2020, a 31% increase from 2019, according to International Data Corp.

Commitment Issues?

Still flirting with the notion of how to harness the power of artificial intelligence? Here are a few reasons to adopt AI today.

  1. Kiss away tedious, error-prone manual underwriting processes such as data extraction, data rekeying, comparing quotes, and policy checking. With the complexity of commercial insurance, often policies can be hundreds of pages with several endorsements, requiring skilled, experienced insurance knowledge workers to manually sift through these documents to ensure accuracy. Read how Zurich Canada plans to use artificial intelligence to automate and streamline policy checking. Zurich is empowering its human workforce to use AI-powered tools to read documents and identify potential errors and omissions hundreds of times faster.
  2. Embrace innovation and digital transformation to increase employee satisfaction, attract new talent, and do more with the same staff. Manually handling thousands of insurance documents a day can be extremely time-consuming. Imagine deploying “touchless” submission processing, eliminating potential errors and slowdowns caused by human intervention and multiple touchpoints inside current processes to expand your underwriting capacity by 50%, be one of the first to respond to submission requests, and increase revenue without adding more headcount.
  3. Capture the hearts of your partners and customers by continuously providing expert advice and insurance coverage recommendations. Give your staff access to emerging technologies that will allow them to spend less time manipulating data and pushing paper. Use technology to optimize processes like comparing multiple carrier quotes to identify the best premiums and coverage, streamline communications and free up brokers to spend more time providing expert client advice.
  4. Clinch the opportunity to upgrade existing skills, master new skills and learn new technologies and platforms to broaden your career opportunities. Instead of giving artificial intelligence the cold shoulder for fear of job loss, humans should embrace the prospect of transitioning to a new role that allows them to focus on critical thinking, complex reasoning, strategic judgment and management work. All of these activities have something in common – humans are far better equipped to do them than machines. AI augmentation and the combination of human/machine workforces will significantly increase productivity and employee engagement.
  5. Attract the next generation of workers who are keen to align with progressive organizations who take a “digital first” approach, are socially conscious and customer-centric, and can offer a host of career challenges and learning opportunities. According to a report titled Jobs Lost, Jobs Gained: Workforce Transitions In A Time of Automation, published by the McKinsey Global Institute in December 2017, by 2030, there will be at least 300 million more people aged 65 years and above than there were in 2014. The insurance industry estimated in 2013 it would need to fill 400,000 jobs nationwide by 2020. For more insights on how to make millennials and Generation Z (those born in 1996 or later) fall in love with the insurance industry, read Insuring Tomorrow: Engaging Millennials in the Insurance Industry and check out the Insurance Nerds interview with Joshua Hollander, CEO from Exec Search Firm, Horton International.

"Artificial intelligence is poised to be more prolific and span every aspect of our daily lives. AI disrupters will drive better customer engagements and have accelerated rates of innovation, higher competitiveness, higher margins, and productive employees. Organizations worldwide must evaluate their vision and transform their people, processes, technology, and data readiness to unleash the power of AI and thrive in the digital era," said Ritu Jyoti, program vice president, Artificial Intelligence Strategies.

As the science and engineering of making intelligent machines continues to evolve and trust in AI-based solutions and their value becomes more deeply rooted in the insurance industry, insurance companies who wholeheartedly embrace disruptive technologies will grow and thrive.

Still not convinced AI is right for you?

Download the Commercial Insurance Underwriting Priorities 2021 eBook with contributions from CNA, Strategy Meets Action, Vouch Insurance, Zurich North America, and many others on how emerging technologies like AI, RPA, machine learning and predictive analytics are digitally transforming insurance. 

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