The impact of AI on the Future of Insurance - Curacel

The impact of AI on the Future of Insurance

July 7, 2021

In March 2021, McKinsey released an insight on the future of AI on insurance come 2030. 

Insurance is on the verge of a profound, tech-driven shift.

Curacel‘s Head of Innovation – Innocent, wrote this piece on how AI can help insurers to mitigate fraud, waste and abuse in their processes. 

The new wave of deep learning techniques, such as artificial intelligence (AI) has the potential to live up to its promise to imitate the perception, reasoning, learning, and problem-solving of the human mind.

Read: Better Insurance Using Artificial Intelligence and IoT

Insurance is expected to shift from its current state of “detect and repair” to “predict and prevent,” transforming every aspect of the industry in the process.

Here’s a summary of the McKinsey insight for you.

The state of insurance in 2030

AI and its related technologies will have a profound impact on all aspects of the insurance industry, from distribution to underwriting and pricing to claims.

An in-depth study of what insurance may look like in 2030 highlights dramatic changes across the insurance value chain.

  • Claims: Claims processing remains a primary function of insurers, but more than half of claims activities would have been replaced by automation. Advanced algorithms handle initial claims routing, increasing efficiency and accuracy. Automated customer service apps handle most policyholder interactions through voice and text, directly following self-learning scripts that interface with the claims, fraud, medical service, policy, and repair systems. The turnaround time for the resolution of many claims is measured in minutes rather than days or weeks. 
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  • Distribution: As AI permeates life underwriting, we will see a new wave of mass-market instant issue products. The number of agents is expected to be reduced substantially as active agents retire and the remaining agents rely on technology to increase productivity. The role of agents transitions to ‘process facilitators’ and ‘product educators’. The agent of the future can sell nearly all types of coverage and adds value by helping clients manage their portfolios of coverage across experiences, health, life, mobility, personal property, and residential. These AI tools help agents to support a substantially larger client base while making customer interactions (a mix of in-person, virtual, and digital) shorter and more meaningful, given that each interaction will be tailored to the exact current and future needs of each individual client.
  • Underwriting and pricing: In 2030, underwriting may cease to exist for most personal and small-business insurance products. The process of underwriting is likely to be reduced to a few seconds as the majority of underwriting will be automated and supported by a combination of machine and deep learning models built within the technology stack. Price remains central in consumer decision making, but carriers innovate to diminish competition purely on price. 

To round it up…

Human claims management focuses on a few areas: complex and unusual claims, contested claims where human interaction and negotiation are empowered by analytics and data-driven insights, claims linked to systemic issues and risks created by new technology, and random manual reviews of claims to ensure sufficient oversight of algorithmic decision making. Claims organizations are expected to increase their focus on risk monitoring, prevention, and mitigation. 

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