The insurance industry, traditionally known for its cautious approach is undergoing a significant transformation fueled by Artificial Intelligence. AI has changed the way people claim insurance offering a multitude of benefits for both insurers and policyholders.
AI can reduce the claim resolution cost up to 75% and also can speed the process of claim from 5-10 times of today’s process.
The Market of AI in Claims
The field of AI in insurance is booming, with the global market expected to surge from $2.74 billion in 2021 to a staggering $45.74 billion by 2031. That's a compound annual growth rate (CAGR) of 32.56%!
Experts at McKinsey predict that by 2030, handling insurance claims will become the most crucial function within the industry, and AI will be the key driver of this digital transformation. The growing demand for swift claim settlements and a more personalized customer experience are fueling the adoption of AI in claims processing. Additionally, AI empowers insurers to crack down on fraudulent claims, significantly reducing losses.
Benefits of AI in Insurance Claim
Claims Registration becomes easier: Like the earlier times, people don’t have to spend hours on the claim registration process. AI has made this process much easier with the help of chatbots which guide them for the claim process. This has not just made the process faster but also enhanced the experience of the policy holder.
Data-Driven Claim Validation: AI matches the claimant’s claim settlement data with the insurance terms and makes sure to validate each and everything. A human can make mistakes while matching the details, AI has evicted this problem and makes more data-driven Decisions.
Enhanced Accuracy and Reducing Fraud: Fraudulent claims pose a significant challenge for insurance companies. AI can be a powerful weapon in the fight against fraud. AI can identify past Fraudulent patterns based on past data and can make sure no fraud claims can be made.
Improvement in Customer Experience: Providing customers with a high quality experience is the priority of every industry. Artificial intelligence has helped insurance companies provide speedier and more effective service, offering a customized, supportive journey. It has made the process more faster and accurate.
Claim-cost Prediction: AI can calculate the claim settlement money for the customer based on the analysis of claim settlement history, customer risk and past patterns.
Remote damage inspection: AI can allow a remote inspection with the help of computer vision, enabling a real-time analysis of affected areas. This can help increase the accuracy of the claim process and speed up the inspection process.
Challenges and Consideration of AI in Insurance Claims
Data Privacy and Security: Insurance claims involve a lot of personal and sensitive data like financial information, medical records, and details about accidents or losses. Security breaches or misuse of this data by AI systems can have significant consequences for policyholders.
Transparency of AI Decisions: Many AI algorithms are complex and opaque, making it difficult to understand how they arrive at a particular decision. This lack of transparency can be problematic for claimants who may be denied a claim or receive a lower payout due to an AI decision.
Claimants have a right to understand how AI is used in evaluating their claims. Insurers need to develop methods to explain AI decisions in a clear and understandable way.
Acceptance and Trust by Policyholders: Not everyone is comfortable with AI handling their insurance claims. Building trust and educating policyholders about the benefits and limitations of AI in claims processing is crucial for wider adoption and positive user experiences.
Over-reliance on AI: Over-reliance on AI can lead to neglecting the importance of human expertise in claims handling. It can lead to rise in errors by AI and can become problematic for the insurance company and policyholders.
Upskilling the Workforce: As AI becomes more prevalent, insurers need to invest in upskilling their workforce to ensure adjusters can effectively collaborate with AI tools and interpret their outputs. This may involve training in data analysis, AI literacy, and effective communication of AI decisions to policyholders.
Conclusion
We understand that integration of AI in the insurance claim process is undeniable, it is a trend that will keep evolving with time. The numerous benefits of AI in Insurance are a blessing for us, but still we can’t deny the risk of upcoming challenges and need to be aware of it. We can’t completely rely on AI, human involvement in every aspect can’t be overlooked.
