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How Are Insurance Firms Using Artificial Intelligence (AI)?

Insurance Firms Using Artificial Intelligence
In the insurance industry, artificial intelligence (AI) has become a buzzword. Nonetheless, despite the fact that we are still in the early stages of AI implementation, the industry has made significant progress.

The Need for AI in Insurance

Insurance is a long-established and highly regulated industry. Perhaps as a result, insurance companies have been slower to adopt technological change than other industries. Insurance is still dominated by manual, paper-based processes that are time-consuming and necessitate human intervention. Even today, customers must deal with time-consuming paperwork and bureaucracy when filing a claim or enrolling in a new insurance policy. Customers may also pay more for insurance if policies are not tailored to their specific needs. Insurance is not always a pleasant customer experience in an age when most of our daily activities are online, digitized, and convenient.

Having said that, we are beginning to see a global push by insurance companies to enhance their technological capabilities in order to do business faster, cheaper, and more securely. There have been several notable examples of insurers investing heavily in Artificial Intelligence solutions in recent years.

If AI technology is fully applied to the insurance industry, McKinsey estimates a potential annual value of up to $1.1 trillion.

How are insurers implementing AI?

There are numerous examples of insurers around the world using AI to improve both their bottom line and the customer experience. There are also a slew of start-ups offering AI solutions to insurers and customers. I'll discuss a few interesting cases here.

The Future of Artificial Intelligence in Insurance

AI has the potential to transform customers' insurance experiences from frustrating and bureaucratic to quick, on-demand, and more affordable. Customized insurance products will attract more customers at lower costs. If insurers apply AI technology to the mountain of data at their disposal, we will soon see more flexible insurance, such as on-demand pay-as-you-go insurance and premiums that adjust automatically in response to accidents, customer health, and so on.

Insurance will become more personalized as insurers use AI technology to better understand what their customers require. By accelerating workflows, insurers will be able to save money. They will also discover new revenue streams as artificial intelligence-driven analysis uncovers new business and cross-selling opportunities.

Spotlight

UCPB GEN

For 54 years, UCPB General Insurance Company Inc. has proven itself to be one of the largest, and among the strongest non-life insurance leaders in the country. In an industry with more than 60 players, UCPB GEN consistently places among the Top 10 general insurance companies in the Philippines. Our five decades of distinctive leadership and commitment to the industry has earned the trust and loyalty of our clients which range from prominent multinational companies to business leaders in manufacturing, service, wholesale, and retail merchandising.

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There is no doubt that we are living in an era in which insurers have been called to transform their business offerings, infrastructure and operations. Successful transformation translates into new revenue opportunities, stronger customer relationships and sustained brand relevance. However, this need to evolve cannot be addressed through superficial changes. Leading insurers are transforming their core offerings to completely reimagine their role in the insurance landscape. As the nominations and winners for the Efma-Accenture Innovation in Insurance Core Insurance Transformation award show, leading insurers are starting their core transformation at the top, and applying it to every touchpoint of the business. Nine pioneering nominees The nine nominees in the core insurance transformation category lead core insurance transformation in various innovations across their value chain. 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Additional innovations, such as Virtual Underwriting which allows clients to undergo underwriting from anywhere they choose, have been developed and are being refined in order to make this goal for a seamless digital journey a reality.” This is an important innovation in the South African insurance and investment landscape, which is highly developed and innovative, and characterised by frequent product updates and enhancements. While products are fine-tuned to meet customer needs, it’s difficult for brokers to keep track of various products in the market and how they compare from one competitor to another. Clients are also not in the position to understand how exactly their financial products compare against competitors. “The South African insurance industry is a complex environment with a vast array of sophisticated products. Financial advisers are faced with numerous competitors each with multiple products and options, resulting in countless different quoting combinations. 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Big data is more readily available and, with the help of AI, can be utilised to make faster and more accurate pricing and underwriting decisions.” Silver: Generali Generali conducted a deep transformation in the way they transact with their counterparts and custodians through the use of blockchain technology. Generali France currently processes 250 thousand orders on funds (to cover unit-linked policies) per year through classical schemes via custodians. The aim is to generate a direct link with asset managers for trading shares of funds without using the costly transfer agent of custodians. With this transformation in mind, Generali France invested in a startup called Iznes, developing a trading platform on funds based on blockchain technology. With this as a foundation, Generali has begun to connect its IT and operations to the innovative platform. The innovation can serve all middle and back offices of investment departments and asset management companies. It crunches transaction costs and creates a direct link between the buy-side and the sell-side. The total cost of Generali Unit-linked orders is expected to drop by half, supposing that 50% of counterparts join the platform. Bronze: FWD Led by their customers’ needs and vision to change the way people feel about insurance, FWD Group Data developed a ‘Smart Insurance Framework’ which sees the business embarking on a ‘AI-everywhere’ approach. The platform has transformed the entire insurance journey for both their customers and employees with the use of advanced technologies and AI power. To create a simpler and smoother insurance experience for customers, FWD created a modern data architecture framework that improves operation efficiency internally and convenience externally. The Group Office Data Platform (GODP) streamlines and integrates all data into a single platform that is smart, secured and scalable. This platform allows business users to harness data, insights and run analytics across all our markets, to help support a spectrum of initiatives in FWD with data. The clever use of data allows FWD to evolve and predict customer responses more accurately, develop a better understanding of customer needs and behaviour, and in turn serve them better. As the nominees and winners show, the insurance industry is embracing technology to pre-empt, analyze and streamline customer, broker and employee experiences. We would love to hear how you are transforming your core insurance operations. Submit your core insurance innovation to the Efma-Accenture Innovation in Insurance Awards for 2022.

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Rising to the challenge of core insurance transformation

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There is no doubt that we are living in an era in which insurers have been called to transform their business offerings, infrastructure and operations. Successful transformation translates into new revenue opportunities, stronger customer relationships and sustained brand relevance. However, this need to evolve cannot be addressed through superficial changes. Leading insurers are transforming their core offerings to completely reimagine their role in the insurance landscape. As the nominations and winners for the Efma-Accenture Innovation in Insurance Core Insurance Transformation award show, leading insurers are starting their core transformation at the top, and applying it to every touchpoint of the business. Nine pioneering nominees The nine nominees in the core insurance transformation category lead core insurance transformation in various innovations across their value chain. The nominations were: AXA for A.Iconic Claims Discovery for AI Quote RBC for their conversational AI Platform, driven by Personal Insights for Life Insurance Application Generali for their fund transaction through blockchain innovation FWD for the AI-Everywhere Smart Insurance Framework China Life Insurance for an intelligent value evaluation system for salesforce Multiasistencia for MACARENA, an innovative AI voicebot that provides100% automated First Notice of Loss in home insurance claims Humania for their ground-breaking income insurance for accident and disability claims Mapfre for Verbatims, a cognitive behavioural model that integrates live customer feedback As can be seen, by the nominees above, AI is a leading technology in core insurance transformation. In fact, every innovation used technology in fresh, structured ways to create a lasting impact on their business. Let’s look closer at the winners, and what their innovations say about how to lead core insurance transformation in 2021. Gold: Discovery Discovery are transforming the way brokers and clients engage with them through the introduction of their AI Quote service. Users are able to upload a PDF or pictures of competitor insurance and investment documents via phone or computer, and receive an equivalent Discovery quote in seconds. The entire journey can be completed in under a minute. Brokers can take the quotes to their clients and where a client has completed the direct journey, they will be called by a sales agent to discuss the specifics of the quote and close the sale. Romek Sadowski, Discovery Life’s Head of Technical Marketing says, “Ultimately, AI-powered optical character recognition (OCR) technology has been able to equip us with a seamless journey for clients, advisers and employees of the business as a whole. For clients, benefits include receiving a comparable quote in less than a minute and an improved understanding of Discovery’s products relative to the market. For advisers, key benefits include more accurate and consistent competitor comparisons, as well as a reduction in sales and quoting frictions. By automating the process of extracting data from policy documents and then converting it into comparable Discovery Life benefits, our advisers are able to spend less time on manual work and more time assisting our clients. AI Quote has also created opportunities for Discovery Life to incorporate digital tools into many of our existing processes and create a single, seamless, digital journey for advisers and clients alike. Additional innovations, such as Virtual Underwriting which allows clients to undergo underwriting from anywhere they choose, have been developed and are being refined in order to make this goal for a seamless digital journey a reality.” This is an important innovation in the South African insurance and investment landscape, which is highly developed and innovative, and characterised by frequent product updates and enhancements. While products are fine-tuned to meet customer needs, it’s difficult for brokers to keep track of various products in the market and how they compare from one competitor to another. Clients are also not in the position to understand how exactly their financial products compare against competitors. “The South African insurance industry is a complex environment with a vast array of sophisticated products. Financial advisers are faced with numerous competitors each with multiple products and options, resulting in countless different quoting combinations. By automating the comparison process, AI Quote simplifies the new business experience for both advisers and clients, increasing conversion rates and improving stakeholder satisfaction. AI Quote ensures that clients who have existing policies with our competitors are quoted comparable Discovery benefits and gives advisers confidence that they are providing clients with the best possible advice when comparing policies.” By removing sales frictions and automatically carrying out comparisons, Discovery’s AI Quote aims to enhance the company’s exposure to potential clients, attract brokers to sell Discovery products, improve the accuracy of replacements and promote Discovery’s brand as a market-leading innovator. With an efficient client- and broker-centric platform, Discovery has taken quoting to the next level. The potential for AI, however, is just beginning to be untapped. Romek concludes, “The insurance landscape is evolving, and we have seen an influx in microinsurance providers, direct-to-customer insurers and niche players in the market. When it comes to life insurance, clients are faced with a dauntingly large number of options – and that number is increasing. Within such complexity, manual processing of data in order to generate benefit comparisons is simply inefficient. A key benefit of AI is that it can complement or replace manual processes and allows for a far more streamlined user experience. Outside of the new business process, AI has displayed immense success in other areas such as customer service, underwriting and claims. Chatbots are now commonly used by insurers around the world to assist clients and answer their questions. Car insurance has been fundamentally changed through advancements in telematics. Big data is more readily available and, with the help of AI, can be utilised to make faster and more accurate pricing and underwriting decisions.” Silver: Generali Generali conducted a deep transformation in the way they transact with their counterparts and custodians through the use of blockchain technology. Generali France currently processes 250 thousand orders on funds (to cover unit-linked policies) per year through classical schemes via custodians. The aim is to generate a direct link with asset managers for trading shares of funds without using the costly transfer agent of custodians. With this transformation in mind, Generali France invested in a startup called Iznes, developing a trading platform on funds based on blockchain technology. With this as a foundation, Generali has begun to connect its IT and operations to the innovative platform. The innovation can serve all middle and back offices of investment departments and asset management companies. It crunches transaction costs and creates a direct link between the buy-side and the sell-side. The total cost of Generali Unit-linked orders is expected to drop by half, supposing that 50% of counterparts join the platform. Bronze: FWD Led by their customers’ needs and vision to change the way people feel about insurance, FWD Group Data developed a ‘Smart Insurance Framework’ which sees the business embarking on a ‘AI-everywhere’ approach. The platform has transformed the entire insurance journey for both their customers and employees with the use of advanced technologies and AI power. To create a simpler and smoother insurance experience for customers, FWD created a modern data architecture framework that improves operation efficiency internally and convenience externally. The Group Office Data Platform (GODP) streamlines and integrates all data into a single platform that is smart, secured and scalable. This platform allows business users to harness data, insights and run analytics across all our markets, to help support a spectrum of initiatives in FWD with data. The clever use of data allows FWD to evolve and predict customer responses more accurately, develop a better understanding of customer needs and behaviour, and in turn serve them better. As the nominees and winners show, the insurance industry is embracing technology to pre-empt, analyze and streamline customer, broker and employee experiences. We would love to hear how you are transforming your core insurance operations. Submit your core insurance innovation to the Efma-Accenture Innovation in Insurance Awards for 2022.

Read More
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Spotlight

UCPB GEN

For 54 years, UCPB General Insurance Company Inc. has proven itself to be one of the largest, and among the strongest non-life insurance leaders in the country. In an industry with more than 60 players, UCPB GEN consistently places among the Top 10 general insurance companies in the Philippines. Our five decades of distinctive leadership and commitment to the industry has earned the trust and loyalty of our clients which range from prominent multinational companies to business leaders in manufacturing, service, wholesale, and retail merchandising.

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Roadzen Partners with HCLTech to deliver AI-driven auto insurance solutions for US carriers and automotive customers

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NAIC Members Approve Model Bulletin on Use of AI by Insurers

NAIC | December 06, 2023

The National Association of Insurance Commissioners (NAIC) Membership voted to adopt the Model Bulletin on the Use of Artificial Intelligence Systems by Insurers during the 2023 Fall National Meeting. The bulletin reflects the work of the NAIC Innovation, Cybersecurity, and Technology (H) Committee, chaired by Maryland Insurance Commissioner Kathleen A. Birrane. Michael Conway, Commissioner of the Colorado Division of Insurance, and Doug Ommen, Commissioner of the Iowa Insurance Division, are co-vice chairs of the committee. "This initiative represents a collaborative effort to set clear expectations for state Departments of Insurance regarding the utilization of AI by insurance companies, balancing the potential for innovation with the imperative to address unique risks," said Commissioner Birrane. As the insurance sector navigates the complexities of AI, the NAIC's Model Bulletin on the Use of Artificial Intelligence Systems by Insurers provides a robust foundation to safeguard consumers, promote fairness, and uphold the highest standards of integrity within the industry. [Source -PR Newswire] The H Committee, comprised of representatives from 15 states, began drafting the bulletin in 2023 with the goal of establishing comprehensive regulatory standards to ensure the responsible deployment of AI in the insurance industry. The bulletin addresses critical issues related to the usage of AI, such as potential inaccuracies, unfair biases leading to discrimination, and data vulnerabilities. While not a model law or regulation, the AI model bulletin serves as a guiding document, fostering uniformity among state insurance regulators regarding expectations for insurance carriers deploying AI. The bulletin comprises four key sections, each addressing crucial aspects of AI usage by insurers. It emphasizes the importance of responsible governance, risk management policies, and procedures to ensure fair and accurate outcomes for consumers. The bulletin reminds insurance carriers that decisions impacting consumers that are made or supported by advanced analytical and computational technologies, including AI, must comply with all applicable insurance laws and regulations, including unfair trade practices. The bulletin also sets forth state insurance regulators' expectations on how insurers should govern the use of such technologies by or on behalf of the insurer to make or support such decisions, including the creation and implementation of a written AIS Program, commensurate with an assessment of the risk in accordance with the guidelines established by the NAIC's 2020 Principles of Artificial Intelligence, and to ensure that decisions impacting consumers made or supported by AI are accurate and do not violate unfair trade practice laws or other applicable legal standards. The bulletin also advises insurers of documentation that a state Department of Insurance may request during an investigation or examination. The initial draft was presented to the working group on June 29, 2023, and subsequently exposed for public comment periods, allowing for extensive input from industry stakeholders, consumers, and legislators. The process involved two exposure periods, with the first public comment period ending on Sept. 5, 2023, and the second ending on Nov. 6, 2023. The review process also included in-person comments during the 2023 Summer National Meeting in Seattle, WA, and during the 2023 Fall National Meeting in Orlando, FL. Significant updates were made to the model bulletin based on the feedback received. These updates addressed concerns raised during the review process, including a shift in focus toward outcomes, revisions to key definitions aligned with National Institute for Standards and Technology (NIST) standards, and updates to language on third-party contracting and testing and validation protocols. Commissioner Birrane expressed gratitude for the collaborative efforts of the H Committee, drafting groups, and all stakeholders involved. The completion and adoption of the model bulletin mark a significant step forward in adapting regulatory frameworks to the evolving landscape of AI in the insurance industry. About the National Association of Insurance Commissioners As part of our state-based system of insurance regulation in the United States, the National Association of Insurance Commissioners (NAIC) provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The U.S. standard-setting organization is governed by the chief insurance regulators from the 50 states, the District of Columbia and five U.S. territories. Through the NAIC, state insurance regulators establish standards and best practices, conduct peer reviews, and coordinate regulatory oversight. NAIC staff supports these efforts and represents the collective views of state regulators domestically and internationally.

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Insurance Technology

Hourly.io Selects Origami Risk Core Solution to Automate Workers’ Comp Policy Rating and Issuance

Business Wire | October 17, 2023

Hourly.io, a fast-growing workers’ compensation and payroll startup, has selected Origami Risk’s multi-tenant Software-as-a-Service (SaaS) P/C core solution to bring critical automation to its breakthrough insurance platform for small and mid-sized businesses with hourly and mobile workers. Hourly will use Origami’s API to instantly quote policies. The platform integrates rates and rules from NCCI and other bureaus with Hourly’s underwriting models. Hourly combines payroll with time and attendance data to determine workers’ compensation premiums with to-the-penny accuracy in real time. The rating information will be instantly applied to applications submitted by insurance agents and brokers through Hourly’s instant quote portal. As we continue our rapid growth across the United States, choosing and deploying the best available technology has enabled us to drive down costs and streamline the rate-to-bind process for small and mid-sized employers, said Tom Sagi, Co-Founder and CEO, Hourly. Origami’s solution seamlessly integrates with our platform so we can scale while maintaining our speed, efficiency and accuracy. “Our automated solution aligns perfectly with Hourly’s objectives and the needs of its distribution network and clients,” said Christopher Bennett, Chief Strategy Officer, Core Solutions division at Origami Risk. “This proprietary capability is among several innovative solution sets we’ve developed to help carriers, pools, program administrators and other insurance providers drive efficiencies across critical functions, meet customer needs and improve overall performance.” Origami Risk offers a full suite of end-to-end, integrated SaaS solutions for policy, rating, billing, loss control and claims administration, reporting and analytics, along with a comprehensive digital engagement experience for all internal and external stakeholders. Established in 2018, Hourly offers workers’ comp insurance and an integrated platform that connects workers’ comp, time tracking, and payroll in real time—an innovation that ensures premiums are calculated with unprecedented precision. Hourly is first of its kind in the industry to bridge this gap seamlessly with a mobile-first platform. About Hourly Headquartered in Palo Alto, California, Hourly.io is an insurtech startup offering full-service payroll and workers' comp insurance for small and medium businesses with hourly workers. Powered by real-time data, Hourly's platform ensures running payroll is as quick as pressing a button and that you get accurate workers' comp premiums down to the penny. For more information, visit www.hourly.io. About Origami Risk – Core Solutions Division Origami Risk provides integrated SaaS solutions that simplify insurance, risk, and safety for insurers, managing general agents (MGAs), program administrators, third party claims administrators (TPAs), risk pools, brokers and more. Origami Risk delivers its highly configurable and completely scalable integrated insurance core system, risk management and safety solutions from a secure, multi-tenant platform accessible via web browser and mobile app. Visit origamirisk.com or contact Origami at info@origamirisk.com.

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