Among the many industries that are changing with the times, many companies in the insurance industry have decided it is time for an upgrade. Existing models have recently been found inadequate and limited, and newer ones are being sought to replace them. Of course, artificial intelligence (AI) is playing a huge part in the new developments.
Before looking at some of the new changes, it must be realized that some things are uninsurable. Insuranceopedia says something is uninsurable because no precise value estimate can be determined for it—such as company trade secrets, reputations, political risks, risks caused by a pandemic, or regulatory risks. In other cases, something that is legal in one place may not be allowed in another.
Some events that exposed the need for an upgrade include more severe weather, the pandemic, political upheavals, cyber risks, supply shortages, inflation, and more. By applying AI to modern data stacks, new models for coverage that provide a greater range are being developed. Here are some changes that you may expect to see affecting your coverage.
More Personalized Coverage
Traditionally, insurance companies have always used generalized models (one-size-fits-all) to cover various areas of need, such as automotive, medical, life insurance, homeowners, and more. They have worked well for the insurance companies. Now, however, they realize that by using AI, they can develop more personalized coverage to fit the needs of the individual.One company, WNS, says that insurance costs shortly will depend on understanding more information about the customer (individual or a business) and their needs. Insurance companies can obtain the necessary information by using apps on your phone and customer behaviors.
Companies can offer more flexible insurance options once they have sufficient data about you. The “internet of things” can provide information from an increasing number of devices, including cars connected to the internet, activity trackers, toothbrushes, and more. The John Hancock Life Insurance Co., for instance, has been working with the Oura Ring (a metal ring you wear on your finger) to detect hours of sleep, mindfulness, heart rate, illness, workouts, and more.
Faster Processing of Claims
One improvement people will be glad to hear about—as a result of these changes—is that settling insurance claims will take less time. AI can look at the data provided for many claims quickly, instead of waiting for a human to try and decipher how the data all fit together. By using AI, an insurance company could determine liability and coverage in minutes—after collecting all the data.Preventing Risks From Occurring
In the past, insurance companies have aimed to provide payment after a liability occurred. A major change occurring now is that they want to help their customers take a more proactive role in preventing covered events from happening in the first place.Right now, insurance companies have collected vast amounts of data from a wide range of events—large and small. Letting AI examine the data can help determine ways to reduce their liability and prevent some claims from happening in the first place. Many customers would likely find that their insurance premiums could be reduced, which would also lead to greater trust in the companies.
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One new area of risk that businesses want coverage for is the increasing number of cyber-attacks and data breaches. Digital warfare is another new field needing coverage because it damages companies’ reputations and security—adding to the need for increased coverage.
Greater Focus on Self-Service for Customers
In a day when technology has become the norm for Americans and fast access to information, customers want an increasing amount of instant service when dealing with insurance companies. DamCo notes that customers are tired of waiting for customer service representatives and prefer to handle matters themselves on their computer or cell phone.Most insurers already offer some degree of online policy management and aim to increase the availability of tools and forms through apps and computers. They could attract more customers by adding features such as electronic signatures, knowledge bases, and online payments. The use of chatbots is also increasing.
The Use of Blockchain Tech
Some insurance companies want to add blockchain technology and AI with various digital devices (as in “internet of things”) to speed up information-gathering processes. Avenga says that the combination will help automate and improve underwriting and pricing to give customers better experiences when dealing with companies.AI can also detect fraud more accurately than humans. It will save companies a lot of money because it can look at a lot of data quickly and analyze it for problems.
The Younger Generation Has Little Need for Insurance
Insurance companies also see a greater need for new clients because young people see little need for it. GenPact mentions that 80 percent of millennials (ages 28–43) do not see a need for insurance at this stage of their lives. They have fewer possessions and tend to focus on experiences, and their living expenses are more focused on the costs of daily living and student loan debt.Implementing these changes—and more—in the insurance industry will soon start affecting large segments of the population. Some companies already offer digital devices or apps that track your health, driving, and other activities. You can expect to be impacted by these changes soon—and it might lead to better prices on some of your insurance costs.
The Epoch Times copyright © 2024. The views and opinions expressed are those of the authors. They are meant for general informational purposes only and should not be construed or interpreted as a recommendation or solicitation. The Epoch Times does not provide investment, tax, legal, financial planning, estate planning, or any other personal finance advice. The Epoch Times holds no liability for the accuracy or timeliness of the information provided.
