We use cookies to provide you with a responsive service to make your experience of our website(s) better. Please confirm that you agree to our use cookies
in accordance with our cookies policy.

By continuing to use our website we will assume that you are happy to receive non-privacy intrusive cookies.
Please be aware that if you disable cookies some functionality on the site will not work.

Alternatively, read our cookie policy to find out more about our cookie use and how to disable cookies.

Accept and continue
Reading this article counts towards accumulating your annual CII structured learning hours. Log in or register to track your reading time and answer questions related to the Artificial intelligence learning outcome(s)

How is technology impacting insurance?

At a glance

  • Today’s consumers have more intricate needs, greater access to tech and are more informed about their choices than ever before
  • The development of insurtechs and changing customer expectations have been key drivers to adoption and investment in artificial intelligence (AI)
  • We take a look at the impact changing technology has had for customers, brokers and insurers.

This article counts towards accumulating your annual CII CPD structured learning hours for Artificial Intelligence.

By reading this article, and correctly answering the three questions underneath, you will have achieved the following learning outcome: Explain how AI is being used within the insurance industry and identify its key benefits to insurers and brokers.

Visit the CPD Hub to log in and begin accumulating CPD hours.

Today’s consumers have more intricate needs, greater access to technology and are more informed about their choices than ever before. With the fact that a massive 79% of UK adults own a smartphone, it’s easy to see why people are choosing to deal with insurance online – especially when it comes to straight-forward cover for home and motor. People are heavily influenced by what they experience in other sectors too, such as retail. Customers want quick and easy – which brings challenges to insurers and brokers in terms of staying on top of these evolving needs.

The development of insurtechs and changing customer expectations have been key drivers to adoption and investment in artificial intelligence (AI). Insurers are using technology to make smarter underwriting decisions, better manage risk, detect fraud and create positive customer experiences. For example, Chatbots are one of the most visible current applications of AI you will see within Insurance – and at Zurich, they are available to Personal Lines customers, as well as for SME and Commercial claims (property and motor).

How is AI helping to drive out fraudsters?

Fraud remains a key issue for the industry, serving to increase premiums for honest customers. However, AI is helping to tackle scammers by detecting fraudulent claims. A hugely successful outcome, when you consider that the average scam costs £12,000 – with the number of fraudulent claims detected in 2018 at 469,000. Technology such as Zurich’s NetReveal software is making it harder for fraudsters to avoid detection and has helped to expose scam circles. The system also provides a further safety net during claims validation, by highlighting individuals with a poor claims history. Not only does NetReveal identify links between entities and flag suspicious claims patterns, it uses probability algorithms to predict the likelihood that a claim is fraudulent – enabling claims analysts to prioritise investigation.

Customer-focussed AI

From fraud detection to enhancing the customer experience, experts predict that AI could be behind every major insurance decision within the next decade. With more dramatic changes on the horizon, progressive players aren’t just sitting back and waiting for them to happen. They are taking action and making investments that will help them to become more customer-focussed, improve their pricing and create operational efficiencies.

While some will continue to rely on broker expertise due to the complexity of their needs, younger people are often willing to buy differently. These customers want to purchase and research online – and expect to communicate via mobile. For example, Pluto, a travel start-up backed by Zurich, is disrupting the travel insurance space and is helping to bridge the gap between the expectations of young people. Policy and claims can be managed and submitted in less than 10 minutes, straight from Facebook Messenger.

The future is big – for data and automation

Keen to utilise their data sets, insurers are set to explore improved methods in order to understand customers, their behaviours and preferences. After all, intelligence is the most powerful instrument us humans have. And we are headed towards the direction of building AI technologies that are at the human level. Within insurance companies, further autonomy is likely to have an even greater impact in the underwriting and claims stages of a journey. Where technology could be able to detect a potential loss before it happens, such as damage to a machine, or increasingly advanced weather forecasts could be used in order to help customers protect what matters the most in the event of an incoming storm. AI will continue to make the identification of claims trends smarter, which could conceivably mean a greater reduction in claims fraud.

Where motor manufacturers are using AI to focus on driverless cars, they should in theory reduce the number of insurance claims and be much safer than regular vehicles. Some large manufacturers have promised that when these self-driving cars are live in the market – they will take responsibility if any crashes occur. This indicates that they expect their vehicles to be very safe, which is good news all round. However, if cars are to be truly autonomous and able to operate responsibly on our roads, they will need to replicate, or do better than the human decision-making process. They will also need to acquire a sense of ethics and this is notoriously difficult to reproduce by an algorithm. Thus, there is much work to be done on the ethical choices these systems would make.

A workforce in transition

Without doubt, AI will continue to increase the speed of processes, make tasks more cost effective in the long-term and ensure around the clock availability. But does this come at a price? Should we be worried about the role that technology plays in human life? Since the introduction of the internet, people have worried about the implications of new technologies – what it forces us to reassess and the implications on humans. Does being faced with the new, rapidly shifting technologies mean significant benefits – but equally does it mean replacing the jobs of humans?

At Zurich, we are actually seeing that working with new technologies, insurtechs and start-ups is opening up new opportunities for employees and requires a new partnership and a collaborative mindset. We recognise that the workplace is in transition and this is fundamentally changing the nature of roles – as in other industries.  Some roles will inevitably decline, some jobs will be augmented or enhanced with technology – while brand new job families will be created.  We’re likely to see the skill sets of employees needing to be much more versatile and for digital skills to sit squarely alongside traditional roles.

By adding technology to business expertise, 50% of new hires to our continuous and automation team for the UK have come from claims, it means we select the right processes to automate for our customers vs those that absolutely need that human interaction.  It also means we can automate more of the mundane tasks to keep giving people more interesting roles.

All in all, it would be hard to argue against the notion that technology is likely to result in a smoother service, for end customers, brokers and insurers – but the role of humans overseeing new technologies remains very important.

For more information on the topics discussed in this article, please get in touch with your local Zurich contact.

Image © Getty

Leave a comment