How Artificial Intelligence Could Revolutionize the Insurance Industry

Insurance has traditionally operated on generalities and assumptions about people and behavior to determine coverage for customers. Young people are more likely to get in car accidents than more experienced drivers and pay higher premiums for their car insurance, even though that generalization fails to hold for every individual. The introduction of usage-based insurance, however, has created an effective means to provide the right insurance for the right price -- based on specifics, not assumptions. Now, UBI is about to gain a power-up through the robust computation capabilities of artificial intelligence. Here's a look at how AI-driven UBI might impact the industry. "UBI is like a traditional insurance product with one particular difference: It's tied to something that's measured on a recurring basis, which then informs how the premium is adjusted," says Doug McElhaney, a partner at McKinsey.