Introduction to AI in Insurtech
Artificial intelligence (AI) is impacting almost every industry, and insurance – and the insurtech sector on which it depends – is no exception, with applications benefiting both customers and insurance firms themselves.
How AI Improves Customer Service
From a customer service perspective, the use of chatbots is helping to answer queries in a more efficient manner, providing customers with instant answers around the clock. AI-powered chatbots can assist customers with contract management, freeing up human agents for more complex issues. Additionally, AI analyses vast amounts of customer data to personalise insurance recommendations. This allows insurtechs to tailor products to the specific needs of customers, ensuring they are presented with the most relevant options.
Generative AI and Customer Frustrations
The emergence of generative AI is likely to see this evolve further, using multiple data sources to provide even more personalised digital interaction. Generative AI can also help target specific areas of frustration for customers, such as repetition when calling a contact centre. Its use helps alleviate this by summarising notes and capturing the details of calls, making sure accurate records are kept.
Internal Efficiency and AI
Internal efficiency is another major benefit of the effective use of AI. For instance, AI helps insurers generate accurate quotes almost immediately. In 2019, Direct Line launched Darwin – a motor insurance platform that uses AI to determine individual pricing through machine learning. This approach has translated into better customer reviews and improved customer service. AI is also used in onboarding and training employees, guiding them through the process and providing support around the clock.
The Risks and Ethics of AI in Insurtech
Yet the use of AI also brings risks and ethical considerations for insurers and insurtech firms. With all AI, it’s essential to understand where the AI models are from, where the data is being trained from, and whether there is an in-built bias. Proper due diligence on the data is key, even with internal data. Organisations must also be able to explain any decisions taken and have human oversight to avoid the pitfalls of the black-box nature of some AI algorithms.
Cybersecurity and AI
AI applications themselves raise the potential for organisations to get caught out in cyber-attacks. Perpetrators can use generative AI to produce highly believable yet fraudulent insurance claims. They can also use audio synthesis and deepfakes, pretending to be someone else. Cyber-attacks can lead to significant data breaches, exposing confidential client information and posing new challenges towards fostering client trust.
The Future of AI in Insurtech
All this means AI requires careful handling if insurers and insurtechs are to realise the benefits without experiencing the downsides. The future of AI in insurtech is brimming with potential. AI will likely specialise in specific insurance processes, leading to significant efficiency gains and improved accuracy. This will also likely lead to even greater personalisation and automation. However, the focus will likely shift towards a collaborative approach, with AI augmenting human capabilities rather than replacing them entirely.
Conclusion
In conclusion, AI is transforming the insurtech sector by improving customer service, increasing internal efficiency, and personalising insurance recommendations. However, it’s crucial to address the risks and ethical considerations associated with AI, including bias, cybersecurity, and transparency. By doing so, insurers and insurtech firms can harness the potential of AI to create a more efficient, customer-centric, and secure insurance industry.
FAQs
- Q: What is the role of AI in insurtech?
A: AI is used to improve customer service, increase internal efficiency, and personalise insurance recommendations. - Q: What are the risks associated with AI in insurtech?
A: The risks include bias, cybersecurity threats, and the potential for fraudulent claims. - Q: How can insurers and insurtech firms address these risks?
A: By conducting proper due diligence on data, ensuring transparency, and implementing robust cybersecurity measures. - Q: What is the future of AI in insurtech?
A: AI will likely specialise in specific insurance processes, leading to greater efficiency, personalisation, and automation, while augmenting human capabilities.
