Nowadays AI (Artificial Intelligence) is changing every kind of industry, but if we observe, its impact is most visible in the Insurance Industry, from this we can understand this way that earlier the claim process used to take several days, now it gets completed in few minutes. Let us understand in a simple way how AI is completely changing insurance claims and risk management.
What is AI?
First of all, understand in simple words – AI i.e. Artificial Intelligence is a technology that has the ability to think, learn and take decisions like humans.
➡️It analyses data ,understands the patterns and then takes accurate decisions.
➡️The use of AI in insurance is growing very fast.
1. AI in Claims Processing — Claims taking has become easy now
👉Earlier when we used to file a claim,
👉We had to fill a lot of forms
👉We had to submit documents
👉Manual verification was done
👉And then after a few days the claim was approved or rejected.
👉But AI has made this process fast and accurate.
🔹 Faster Claim Approval
👉AI algorithms verify documents instantly.
👉Fraud detection tools check the authenticity of the claim.
👉Image recognition assesses the damage (just like we get an estimate as soon as we upload a photo of a car accident).
🔹 Chatbots and Virtual Assistants
👉Insurance companies now use chatbots which guide customers 24×7.
👉From filing a claim to tracking the status, everything is handled by a chatbot.
🔹 Fraud Detection
👉AI detects the suspicious claims
👉Quickly detects unusual patterns such as multiple claims at the same accident location.
Example:
Insurers like ICICI Lombard, Lemonade (USA), Ping An (China) have launched AI-based claim settlement systems which settle claims within a few hours.
2️⃣ In-Risk Assessment – Policy making just got smarter
👉Calculating risk is a big task for insurance companies. Earlier this was done on very limited data. But now because of:
🔹 Personalized Premiums
👉AI analyses the customer\’s health records, driving behaviour, lifestyle data.
👉This decides the personalised premium – which is fair and accurate.
🔹Predictive Analytics
👉AI predicts future risks by looking at historical data.
Like: analysis of earthquake prone area, flood risk, accident-prone roads.
🔹 Wearable Devices Integration
✅Health insurance companies are understanding real-time health risks by collecting data from fitness trackers, smartwatches. Thia also motivates the customer. Companies also give discounts by tracking staying fit.
✅This promotes preventive care and reduces claims.
Example:
If John\’s smartwatch tells the company that he exercises regularly, his blood pressure is normal – then his premium can be reduced.
3️⃣ Future of Insurance Companies from AI
🔹Customer Experience Better
👉fast claims
👉Instant support
👉Personalized offers
🔹 Reduced operational costs
👉Companies\’ expenses are reduced due to reduced manual work.
👉Paperless process also reduces environmental impact.
🔹 New Insurance Products
👉Cyber insurance
👉Climate risk insurance
👉Usage-based insurance (e.g. the more you drive, the more premium you pay)
4️⃣ What are the challenges with AI?
😳Not everything is perfect. There are some problems:
😳Data Privacy: It is difficult to keep customers\’ personal data secure.
😳Bias: If AI gets biased data, it can make wrong decisions.
😳Job Loss: Manual jobs are decreasing, due to which some people may feel job insecurity.
That\’s why regulators like IRDAI (India), FCA (UK) and NAIC (USA) are strictly monitoring AI.
5️⃣ Conclusion — Future of Insurance is Bright with AI
✅AI is making the insurance industry more fast, accurate and customer-friendly.
✅Claims are now being settled within hours
✅Risk assessment is becoming highly personalized
✅Fraud detection has become strong
✅Customers are getting better service.
But at the same time companies will also have to focus on data security, transparency and fairness. If AI is used in the right way then both the insurance industry and customers will benefit.
So in this today\’s article I have covered almost a lot about AI, still if you have any questions then you can comment.