NEWSPracticality Is Key for Traversing a New Era of AI-Led Insurance
July 29 2024, Published 1:39 a.m. ET
Artificial intelligence is pioneering a new era of insurance technology with the potential to enhance carrier profitability and policyholders' satisfaction. Integrating this emerging technology promises carriers savings on operational costs while improving accuracy. As this digital infrastructure gains momentum, most concerns can be addressed and carriers will have a valuable tool for mapping future trends.
However, unleashing the power of AI in insurance won’t happen overnight. Different carriers will experiment with varying solutions, discovering what procedures can be elevated through AI integration. Todd Rissel, insurance expert and co-founder of e2Value, the market’s leading full-feature asset valuation provider, advocates for carriers to embrace practicality. Due to the legal, regulatory, and general complexity of insurance, experts like Rissel urge more strategic adoption over hasty initiatives.
Recent technological breakthroughs have been the catalyst for AI’s rapid spread across the globe. Generative AI releases and the business landscape’s increasing interest in leveraging tech to reduce costs and improve consumer experiences have fueled this transformation. AI solutions can be deployed across a variety of insurance tasks, but reports currently showcase distribution, pricing, and claims processing as the three most impacted operations. Alongside trends for underwriting to become heavily automated, insurance professionals will see the industry shift toward some, seemingly, radically new ways of thinking. Monitoring and prevention will be at the forefront of this upcoming shift, reducing risk and losses for carriers and policyholders alike.
Studies from 2022 and 2023 noted that 88% of auto insurance carriers use or plan to use AI. Home insurance (70%) and life insurance (58%) carriers scored lower on their integration plans, but the overall landscape of insurance is steadily digitizing. Amid the ongoing struggles of inflation and geopolitical crises, consumers are seeking added transparency from their policies. With the application of AI, carriers hope to improve experiences for customers, employees, and other stakeholders. These integrations will boost productivity and efficiency which can modernize the insurance supply chain. However, a lack of regulation should encourage carriers to be mindful of how they leverage AI.
Todd Rissel, an insurance expert with decades of expertise, advocates for carriers to consider the limitations of current AI applications. By remaining realistic about practical uses, carriers can explore, test, and integrate whatever unique technology suits their needs. AI is currently being used to summarize unstructured data, develop and price new policies, and process claims. While these applications are promising, Rissel underlines the critical need for an abundance of the correct data to make accurate insights. “Building policies, processing claims, and measuring risk effectively is only possible with the right amount of the correct data and critical thinking,” Rissel says. “Although AI can process this information much faster than humans and identify patterns, I think we’re too early in the process to use AI without oversight.”
Rissel believes AI can be implemented in pricing and risk selection because there is currently enough easily obtained data to ensure accurate suggestions. However, AI-led distribution and claims processing may not be able to overtake the nuances seen by agents. Until oversight becomes unnecessary, carriers should accept the factors preventing the industry from evolving immediately. Despite data inconsistencies, they can establish a well-rounded team of experts to handle integration. After adequate experimentation, a company can successfully deploy new technology addressing simple issues before scaling to more complex tasks. Many are already on this journey.
e2Value, a SaaS platform offering full-feature asset valuation services, has taken a calculated approach toward integrating AI. The business recognizes AI’s advantages but remains human-centered in its operations. This ideology stems from the founders’ original motivations to disrupt legacy valuation services with tech-enabled alternatives. “e2Value invests heavily in emerging technologies because we understand the potential of these tools,” Rissel says. “While we strongly believe more AI is needed to solve the mystery of property valuation for carriers and homeowners, we respect the value humans bring to insurance procedures. This is why we are mindful about what AI integrations we use.”
Across all insurance verticals, carriers and policyholders will continue to have differing opinions about value, risk, and acceptable exposure. Technology will be a tool for increasing policy accessibility and improving a carrier’s bottom line.
