Somewhere along the line, the role of AI in the insurance industry has changed. From a bolt-on extra to add efficiency – a tech issue rather than core to the business – it’s evolved into an imperative. And with AI giants such as Amazon reportedly eyeing the huge global insurance market with interest, incumbent players ought to take action now, and position themselves ahead of the field. However, among insurers, recognition of AI’s importance remains slow – slower in fact than any other industry.
Some insurers in Switzerland are already deploying cognitive technologies to great effect (as outlined in a recent post). For those less certain where to begin (but aware that they need to make a start), why not look first at data? The wealth of information available to insurers about their client base and markets is one of their greatest assets.
Access to accurate data was cited by most respondents to Cognizant’s survey as the potentially greatest obstacle to AI. So despite the vast amounts of data available, insurers find it a challenge to forge links with AI. They need a strong strategy to pull together disparate systems and databases, and eliminate the legacy platforms that have no future. It’s also a matter of experience: insurers will need to build (or source) the expertise to generate real business value from the rising volumes of IoT data.
But once the basic frameworks are in place, insurers have rich opportunities to reap actionable insights from data sources such as fitness trackers, connected homes and cars, and to channel the millions of data points into their business models. With AI analyzing a broad range of external data sources, underwriting can be completed in minutes. “Behavioral pricing” is another growing, AI-powered opportunity. Despite privacy concerns, consumers do appear sanguine about the idea of sharing information. Sales of vehicles with embedded telematics, for instance, are surging worldwide. Swiss Re, to cite just one example of many, expects a 15-fold increase in telematics-based premium volumes by 2025. Switzerland, with its broad base of telematics startups, is the ideal seedbed for insurers to test new approaches. Allianz Suisse, for instance, was already offering fleet telematics in Switzerland before its German parent.
AI is business first
Cognizant recommends framing AI in terms of business needs, rather than looking at it purely as a technology issue. For example, consider the potential for enhancing the customer experience with extra speed or personalization (over half our survey respondents who were familiar with AI projects were using it in customer service). Or look at ways to improve risk assessment (check out here how Cognizant helped flood insurers deploy AI to achieve more accurate views of the market). The opportunities are limitless.
To learn more about the vital importance of AI for the insurance industry, and read how Cognizant has helped organizations integrate AI into their business, download the Cognizant white paper The Insurance AI Imperative.