How AI Can Humanize Insurance

AI lets insurers make connections and draw insights from data that otherwise may not have been available, at least not at speed or scale.

An artist’s illustration of artificial intelligence (AI)

Having spent years as a business strategist and supporting the technological advances across financial, legal and human capital management industries, I have been—and will remain—optimistic about adopting technology in the insurance sector. Technology tools have moved our industry forward when deployed correctly and have modernized customer and user experiences. Artificial intelligence (AI) and machine learning (ML) are the next technologies in line. 

For insurance carriers, the key to delivering the best protection to policyholders is creating empathy-driven, humanized insurance strategies. In other words, humanized insurance fosters trust, earns loyalty and creates lasting value between the customer and the insurer. In many ways, AI provides so much room for insurers to invest in humanized experiences. When done right, implementing AI and ML will spur the next evolution of our industry, enhancing speed, efficiency and accuracy and reimagining insurance for the better.

See also: 5 Ways Generative AI Will Transform Claims

A Faster, More Humanized Process

AI-driven underwriting and claims processing are already showing its potential. In its infancy, we have seen AI help insurers better assess and mitigate risk, scope more accurate premiums, speed settlements for policyholders and deliver better customer experiences. Insurance has forever been a data-driven industry. AI and ML tools will maximize data’s potential while giving organizations better insights and more bandwidth to focus on the customer experience and serving policyholders.

So, what does an AI-driven underwriting and claims process look like? AI powered by ML algorithms can cross-reference vast data sets at a completely different speed and capacity than humans. This capacity allows insurers to make connections and draw insights from data that otherwise may not have been available, at least not at speed or scale. For example, identifying fraudulent patterns, assessing risk profiles, identifying outliers on calculations of premiums and leveraging historical claims data to make informed decisions. 

The core of humanized insurance is protecting people. Responding to market changes quickly is critical in protecting people and businesses, and AI is already being used in this area. Insurers leverage AI-driven satellite imagery, for example, to assess environmental factors such as wildfire risk or even the extent of damage after a natural disaster. Having this real-time data means accurately pricing premiums based on geographic location. It also means verifying claims by cross-checking with real-time imagery or responding to crises before or quickly after they occur. 

We have also seen additional support from AI on the distribution and services front with chat robots or virtual assistants that offer 24/7 support and answer customer questions in real-time, enhancing customer engagement. Additionally, AI analytics help to inform insurers on tailoring to the proper customer segmentation and establishing customized marketing and distribution strategies. The generated data and the segmentation analyses allow insurers to determine whether a policyholder prefers to speak to an agent on the phone or to go directly to an app or website with accessible information.

A Win-Win for Customers and Insurers

Like any industry, customer experience in insurance is crucial, and while AI may not directly appeal to customers, better pricing and faster claims resolution do. Additionally, real-life customer service agents can exert their energy toward creating a better experience because many tedious or time-consuming tasks within the underwriting and claims process are in the “hands” of AI. 

Personalization takes on a completely different look when backed by the support of AI and ML tools. At a macro level, these tools' data aggregation and insight create more accurate personas and customer profiles that inform business decisions. At a micro level, using generated data on individual policyholders' unique characteristics, risks and preferences informs insurers on how to best meet an individual's needs. For example, electric vehicles track loads of AI-generated data that insurers can leverage, including driving behavior, which can allow for more personalized premium pricing, such as lower rates for safe drivers. EVs also track collision details, which insurers can use when processing claims.

With personalization comes trust. Each end-user will have different preferences and comfort levels when it comes to sharing anonymized data and personal information and to what extent they would like that data used to customize their experience. Insurers must have their finger on the pulse and put themselves in their customers' shoes to successfully deploy these tools. 

People value their time. Insurers are speeding up the time it takes to talk to an agent and providing customers with the feeling of being heard, creating a more empathy-driven insurance process. The more personalized the experience, the more worthwhile and valued the customer’s time on the phone, in the app, or on the website, the more likely customers are to return to that insurance provider. In fact, McKinsey found that the number one barrier to purchasing insurance is often poor customer experience. Embracing AI may just be the answer to improving the customer journey and increasing customer loyalty. 

See also: The Rise of AI: a Double-Edged Sword

A New Generation of AI-Informed Talent

To prepare for this technology’s impact, insurers should prioritize investing in talent and business workflows to build a solid foundation for AI integration. AI will generate more actionable data for insurers to make better decisions. Thus, new skills are required, including determining what data can be brought in and how we audit it. This new data can lead to new products that customers ask for and will create a whole new generation of jobs. 

Consider an executive who is responsible for understanding and managing the AI-generated data. According to a Gartner study, 35% of large organizations will have a chief AI officer who reports to the CEO or COO by 2025. And, in just 10 years, AI solutions will result in more than half a billion net new jobs. Other examples of roles could include chief ethics officers dedicated to ensuring all generated data is ethically used or chief training officers responsible for developing a process for the new jobs. A McKinsey study reinforces that AI enhances how STEM, creative and business and legal professionals work instead of displacing or eliminating jobs outright.

Furthermore, insurers will need to work hard to monitor and adapt to evolving regulations and compliance requirements related to AI usage. This means ensuring your “house” is in order and working with the right vendors and ecosystem partners with the same governance standards and ethics representing your business. 

Evolution for the Better

By embracing AI, the insurance sector has the potential to leverage emerging technology for operational efficiency, enhancing customer experiences and reimagining personalization. 

I remain optimistic that if insurers invest in preparing for this transformative technology, it will enhance operations and provide a more accessible, efficient and accurate future for the industry and its stakeholders.

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