This article is Part 1 in a 5-part series titled "Data Science Use Cases in Insurance." Today everyone is talking about Artificial Intelligence (AI). But what is AI? AI is a science that enables computers to think like human beings. Is AI a new concept in the field of computer science? No, AI has been around for more than half a century now. (The term “Artificial Intelligence” was coined in 1956).
While the world around us is changing so rapidly, adapting to this change is no longer an option but a necessity to survive. The Indian Insurance Industry, too, as a whole, has proven its resilience in the current dynamic context but nevertheless continues to face various challenges to be dealt with as it navigates through this evolving landscape. As innovators, we at Aureus Analytics felt the urge to aid these giant strides with a little insight from the who's who of the industry. Thus, came about the metamorphosis of 'Aureus Insights' from a weekly blog to a periodically published yearbook in India that encapsulates this changing trend in the inaugural edition, the AI landscape, and a bird's eye view of what we can expect on the road ahead.
Digital is the key player in this time of the Covid-19 pandemic. Insurance companies are embracing digital channels now more than ever to reach out and connect with current and prospective customers. Covid-19 has changed the public’s outlook on insurance. Its value is perceived to be more critical as folks are considering the consequences of not being covered. Because of this, it’s essential now more than ever to provide consumers the ability to research products online without the assistance of agents, and at the convenience of their own home. Insurance companies must provide the tools and means to analyze various insurance products, provide price transparency, and a clean digital environment that is easy to navigate and execute.
In my earlier blog, “Data-Driven Insurance: The New Normal in the Post-Pandemic World,” I concluded that in the future, the insurance industry would be data-driven. Not only data-driven, but we’ll see the use of emerging technologies like Artificial Intelligence, Image Recognition, and Natural Language Processing BOTs will be the buzz words in the corridors of the Insurance industry.
This is the age of data. This pandemic has forced us to find new ways to get our work done without putting ourselves in danger. Consumer buying behaviours have changed in order to adjust to this new normal in the post-pandemic world. Before we talk about the changes in the business to navigate in the next two years, we should have a glimpse of the insurance business: What, How, and Why of the insurance business.
In our previous blog article, “Using AI for Increasing Agent Productivity,” we discussed how many insurance companies can only analyze agent productivity based on the premiums written and the loss ratio of their network of independent agencies. In part 2 of our series of articles on “The Top 3 Emerging Trends for Agent/Advisor Analytics Using AI”, we will focus on the benefits of understanding agency sentiment for insurance companies that utilize a network of independent agencies.
Currently, many insurance carriers can only analyze agent productivity based on the premiums written and the loss ratio of their network of independent agencies. Looking only at past results doesn’t necessarily provide an accurate view of how an insurance carrier can increase agent productivity going forward. By using AI for increasing agency productivity, insurers can now predict the best course of action as opposed to waiting to review past results.
Sentiment reveals a lot about what customers think about an insurance brand, including how well customer representatives are resolving issues and how happy customers are with the underwriting process. This is where the sentiment analysis of structured and unstructured data can help insurers understand how their customers are feeling.
RPA is Changing Lives The digital marketplace is extremely challenging. Businesses must stay ahead of the game by being innovative and creative to continually provide automated processes that will improve the customer experience. Robotic Process Automation (RPA) and Digital Process Automation (DPA) are the front runners by being one of the fastest growing segments of business technology these days. Globally, the RPA market size was valued at USD 597.5 million in 2018 and is expected to register a compound annual growth rate of 31.1% between 2019 - 2025.
With the artificial intelligence (AI) technology that exists today, an AI-enabled single view of the customer provides insurers with an opportunity to improve the customer experience. In the previous blog article “The Importance of Having a Single View of Your Customer in 2019,” we discussed a few of ways this can be accomplished.
An interview with Jackie Vergne, Director of Customer Success
As we set our feet in 2023, having experienced a roller-coaster ride last year thanks to the geopolitical tensions and some lingering rub-off effects of COVID-19, it drives home that "change is the only constant." Like any other industry, insurance is undergoing paradigm changes at different levels, whether recruiting potential candidates or customer onboarding, to name a few. However, a common thread that ties the myriad business functions of an insurance company has been data and innovation. There has been an ever-increasing need for insurance providers to use data and embrace innovation in their routine activities, eventually to stand the cut-throat competition.
Risk Management is a core function within the insurance industry. It is a vital responsibility of the underwriting team. Insurance companies collect data scattered across different business units in various formats – some of which are paper and digital, most of which are typically unstructured. The underwriting team doesn't have immediate access to the information required for internal and external decision-making, resulting in delays in making decisions and costly mistakes.
Most insurers offer similar products and services, which makes it challenging to attract new customers and retain them. As an industry, insurance is low-touch, and insurers seldom interact with their customers. A report shows that the top companies have an average customer retention rate of 93 - 95 percent, while insurance companies have an average of 84 percent.