Infographic – Artificial intelligence in the insurance sector
By Katerina Mansour - 27 April 2021
The insurance sector is slowly but surely embracing new technologies to address some of its major pain points. From leveraging NLP technology to tackling customer experience in health insurance and combatting insurance fraud, we’ve looked at several trends in the sector. This time, we provide an overview of artificial intelligence (AI) in insurance, covering key use cases and benefits.
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Key benefits of AI in insurance
By implementing AI into their processes, insurers can save time, reduce costs, improve customer experience and increase profitability. Indeed, AI can transform typically tedious and time-consuming processes: underwriting, claims management, fraud detection, customer service…
Beyond savings in terms of time and costs, AI can also help reduce human errors. These errors can be common due to factors like changing regulation or the breadth of information to analyse for fraud prevention.
The benefits of implementing AI in insurance seem clear to stakeholders in this ecosystem. Indeed, 84% of surveyed French investors believe AI will revolutionise the insurance sector. Moreover, 66% of insurers feel AI can help improve workforce productivity.
The benefits of AI are also increasingly clear for consumers. 44% of US consumers are comfortable using chatbots to apply for insurance. 43% of them are comfortable with insurers using AI to provide more tailored policies.
Growing investments for AI in insurance
With increased awareness of its benefits, has come increased investments in AI. Indeed, 87% of surveyed insurers are already seeing their companies invest $5m or more in AI technology each year. Furthermore, corporate interest in Insurtech startups has led to some impressive fundraising. In 2020, $7.1 billion was raised across 377 deals. An impressive unicorn in this space is Shift Technology. The startup, which was previously rated by Early Metrics, has raised $100m since its creation.
As a whole, AI startups raised $73.4 billion in 2020, despite the Covid-19 crisis. Indeed, the pandemic appears to have raised more awareness of the benefits of AI technology, rather than threaten the sector’s growth.
Startups offer promising solutions
There are currently approximately 1,500 active Insurtech startups worldwide. In this infographic we highlighted three promising projects.
Inspekt Labs, one of Early Metrics’ rated startups, develops a software solution to automate the asset inspection process for vehicles, property, and consumer goods by applying computer vision and machine learning to smartphone-generated images and videos.
Cognitiv+, another rated startup, develops an AI platform that extracts data from contracts, policies and legislation to provide companies with insights from their legal data.
Cytora develops an AI-based solution for underwriting. The solution evaluates risks to determine fair pricing and increase profitability by improving loss ratios.
While many indicators are positive, one key challenge for implementing AI in insurance will be the customer adoption rate. While many consumers are interested in more personalised offers, more efficient customer service and perks like lower prices, data privacy concerns remain prevalent. Furthermore, some customers, especially elderly ones, still prefer interacting with human beings rather than bots.