Insurance executives believe that artificial intelligence (AI) will significantly transform their industry in the next three years, with insurers investing in AI to empower agents, brokers and employees to enhance the customer experience with automated personalized services, faster claims handling and individual risk-based underwriting processes, according to Accenture's Technology Vision for Insurance 2017. According to the report, three-quarters (75 percent) of insurance executives believe that AI will either significantly alter or completely transform the overall insurance industry in the next three years. "The adoption of artificial intelligence is gaining momentum within insurance, with executives pointing to AI's potential to revolutionize the customer experience and empower agents, brokers and employees," said John Cusano, senior managing director and global head of the Accenture Insurance practice. According to the report, the rise of AI is creating new opportunities for insurance agents, brokers and employees to deliver a better customer experience, with the technology enhancing the way sales and services are executed, facilitating faster claims processing, and enabling more-accurate, individual risk-based underwriting processes.
Artificial intelligence (AI) will "significantly transform" the insurance industry in the next three years, with insurers investing in AI to empower agents, brokers and employees to enhance the customer experience with automated personalized services, faster claims handling and individual risk-based underwriting processes, according to a new report from Accenture.
In spite of those problems, in the last decade, we noticed a new trend emerging. Insurances, in the effort of trying to reduce moral hazard problems, they started offering premium discounts to their final customers in order to get extra information. This occurred either through a questionnaire (asking directly the customer for further data in exchange for a lower price) or indirectly through devices (healthy devices, black boxes, etc.). The real issue though has been the engagement side of this proposal, because of the opposite nature of information, rewards, and human nature. The rewards offered were indeed either temporary or provided only once and people got lazy very quickly, while the information stream needed to be constant.
How do you price a product when you do not know how much it costs to produce? This is a problem the insurance industry faces every day. While most industries know the cost of materials, labor, and profit margin to calculate the price of their products, insurance does not know the cost of the product when it is sold. The true cost of the product may not be known for many years once all the claims have been paid. Hence insurance companies, and specifically actuaries, rely heavily on using historical data to predict future behavior to create premium rates to price its products.
From Siri to our investments, the use of artificial intelligence to make decisions has expanded rapidly in the last five years. As we've seen in this series, this trend is just starting to reach the insurance industry. Insurance agents working today could be forgiven for wondering if a robot will put them out of work in the coming years.