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Cornell Student Articles on Topical Affairs

How Artificial Intelligence is Shaping the Insurance Industry

Artificial Intelligence (AI) has proven to become a monumental breakthrough in our modern lives. Whether it’s the virtual assistant in your phone who just dictated your schedule on command, the self-driving cars you see cruising around the streets, or the online marketplace ads related to boxing you see in every site you visit since you searched Google for the best kind of boxing gloves, the shift towards automated systems and production has created a more convenient and personalized way of providing goods and services specially catered for every individual’s preference and need. While AI has shaped the new and innovative ways in which how more and more industries have traded manual methods into a system dictated by algorithm and command towards their labor, marketing, and production, there are still a few industries lagging behind. The insurance agency is just one of the prime examples of having outdated methods which cause disappointment among customers.

Filing a claim is a thorough and time-consuming process that goes through a lot of procedures from encoding to evaluating before a claim is being settled. It could even take longer if there is only a single person assigned for the job, or if intervention from an expert is an added necessity. Another challenge of manual claims management is claims audit, which would take additional manpower and costs. Without an automated system or database in place, outdated methods like these remain a problem for both insurance companies and their customers.

Smarter and Efficient AI-Based Claims Processing

Application of AI in the claims processing has proven reliable in speeding up the claims processing by digitizing data from the hospital’s invoice, making it easy for the system to import data without the need for encoding on the insurance company’s part. From the data available the system reviews and decides whether the claim is correct or needs intervention, and guides the auditor into deciding whether to reject or accept the claim. For a manual method of claims processing, this would cost time and manpower to get the job done. A successful cognitive system makes way for a faster and reliable claims management through digital data, with lesser time and manpower costs. Patients also get to benefit by getting quality and efficient customer service without having to go through red tape.

Personalized Approach to Customer Service and Marketing

The use of chatbots, or virtual assistants, offers a personalized service to customers by interacting with customers through various social media platforms. Having a Natural Language Processing (NLP) and sentiment analysis enables the chatbot to understand and interact in a personal and intelligent manner. Chatbots are created to cater to different customer needs such as customer support, analyzing customer needs and intentions, and even virtual consultation. An effective chatbot can provide the necessary data for possible leads, address claims, or ensure that the right insurance coverage is provided to the customer. The leads provided by the chatbot will also enable insurance companies to create insurance products that are in-demand, and determine what customers are keen to protect. An example would be availing income protection insurance for a father who doesn’t want his family to be burdened with expenses should he pass away unexpectedly or should he be diagnosed with a terminal illness in the future.

A targeted approach to marketing can also be made by providing an insurance product suited for a potential customer from information taken by chatbots.

Underwriting Made More Convenient and Accurate

Underwriting is another costly process that requires survey questions and lifestyle check in order to determine premiums. With an individual’s social profile accessible online, bots can determine behaviors and create a pattern for determining the level of risk of a customer. Medical records, professional affiliation, and even social media interactions are just some of the available data online that AI can use to predict an individual’s risk management and provide the necessary premium. In turn, AI can improve ROI and bring in potential sales by bringing in successful leads.

Fraud Detection is Minimized

Insurance fraud is one of the biggest problems in the industry that AI has a huge potential of mitigating. Due to factors such as human error, costly auditing processes, and inaccurate risk analysis, Machine Learning (ML) algorithms have been developed to help detect fraud by detecting patterns that slip beyond human recognition. The ML automatically filters through claims to determine which are valid and non-valid claims, and flag unusual and suspicious claims for further investigation. As new data presents itself, the machine determines from historical data the patterns of fraudulent claims to successfully improve the fraud detection process and lessen or completely eliminate the passage of fraudulent claims in the future while also predicting repair costs and severity of damages.

Loss Prevention By Forecasting Potential Risks

With AI leaning more towards the prevention of the onset of diseases, calamities, and accidents such as telematics and weather forecast, having data beforehand can speed up the underwriting process and can determine an individual’s risk management. Data from activity trackers such as FitBit can help determine your activity levels, while predicting calamities beforehand can help an individual prepare beforehand to lessen the damages brought by a natural disaster.

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