3 Ways Artificial Intelligence Could Disrupt the Insurance Industry Hero Image

3 Ways Artificial Intelligence Could Disrupt the Insurance Industry

Technology is disrupting our world at an unprecedented pace — and the insurance industry is not exempt. New advances in artificial intelligence (AI) are expected to affect the insurance industry in innovative and sweeping ways.


What is AI and why does it matter to the insurance industry?

AI is a broad term referring to any system that applies behaviours associated with human intelligence (such as learning, reasoning and problem-solving) to accomplish a task.

The insurance industry has always relied heavily on algorithms to gain a better understanding of risk. Underwriters, for example, use algorithms to calculate risk and come up with rates that ensure reasonable payouts without bankrupting the companies that provide them.


How is AI currently being employed by the insurance industry?

The insurance industry has already adopted technology featuring AI to improve the quality of their products and services. Some examples of this include:

  • Assessing risk using big data. Large insurance companies use data analytics to inform their premiums and better assess risk.
  • AI-powered claims and settlements. Smart chatbots are used by some companies to file online claims and respond to customer service inquiries.
  • Usage-based policies. Data collected by connected devices are being used by insurance companies for usage-based calculations. Customers’ rates may vary depending on how often they engage in specific activities.


How will AI affect the insurance industry in future?

The greatest benefit AI offers to the insurance industry is increasingly accurate and personalised services. Instead of choosing from several options, customers may have custom policies prepared for them that consider their budget and lifestyle.

Here are three ways the insurance industry may adapt to AI:



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Dynamic insurance products

The Internet of Things (IoT) refers to the global network of connected devices we use every day. It is expected that there will be over 75 billion connected devices by the year 2025. Each of these devices has the potential to report on your behaviour, and your rates can be adjusted accordingly.

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Improved customer engagement

Although customer chatbots exist today, they are limited. In future, smart chatbots may be able to interact in far more complex ways — such as by responding intelligently to open-ended questions.

Apps on your phone may even be able to warn you if an action you are about to take will affect your rates.


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Automation

Automation within the insurance industry may make some jobs obsolete while simultaneously making room for new opportunities.

Automated self-driving cars may also have a dramatic effect on the motor vehicle insurance industry. As accident rates drop and it becomes harder to allocate fault, the industry may begin to diminish.

It is an exciting time to join the insurance industry. Technological disruption promises to open new opportunities for the next generation of insurance professionals.

Are you interested in a career in insurance? Explore our What You Can Do section for career recommendations based on your personality and interests!

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