# Artificial Intelligence is creating smart insurance Author: Pal Sinha, Barnali Author URL: https://financedigest.com/author/pal-sinha-barnali Published: 2017-11-01 Category: TECHNOLOGY Category URL: https://financedigest.com/category/technology Meta Title: AI Revolutionising Insurance Industry Meta Description: Discover how AI is reshaping the insurance industry, from preventing workplace injuries to enhancing customer service and underwriting efficiency. URL: https://financedigest.com/artificial-intelligence-is-creating-smart-insurancehtml ![undefined](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/fd011117-7-1736843316243-compressed.jpg) _**Vineet Singh**, Head of Insurance Technology Practice Europe, Tata Consultancy Services_ The global insurance industry is going through significant change. We are seeing major changes in this sector, driven in large part by digital and data innovations including Artificial Intelligence (AI). Long standing [insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "insurers") are making significant investments in technology to adapt to changing business dynamics before they are disrupted by nimble, agile and technology first companies. Often with a particular focus on customer service, in fact, the insurance sector has been exploring ways for AI to augment the [end user’s](https://www.financedigest.com/industrial-magnetrons-market-competitive-growth-strategies-based-on-type-applications-end-user-and-region.html "Industrial Magnetrons Market Competitive Growth Strategies Based on Type, Applications, End User and Region") experience and deliver more tailored products for several years. According to the second part of the Tata Consultancy Services Global Trend Study the insurance industry is outspending many other key verticals such as automotive and banking, having invested on average $124 million on AI in 2015, compared to a cross-industry average of $70 million. But with AI investment expected to rise exponentially, we must ask where the value is most apparent and how can it [improve the insurance](https://www.financedigest.com/improving-online-visibility-for-insurers.html "IMPROVING ONLINE VISIBILITY FOR INSURERS") industry specifically? There are also broader perception around the [impact on jobs and the ability of people to adapt to these new tools and business](https://www.financedigest.com/pediatric-hiv-infection-treatment-market-by-covid-19-impact-analysis-volume-and-value-revenue-business-opportunity-future-projections-and-key-trends.html "Pediatric HIV Infection Treatment Market By Covid-19 Impact Analysis – Volume And Value, Revenue, Business Opportunity, Future Projections, And Key Trends") models. What seems clear based on our data, however, is that [insurance industry](https://www.financedigest.com/automated-cyber-risk-quantification-saving-the-insurance-industry.html "Automated Cyber Risk Quantification: Saving the Insurance Industry") displays an encouraging willingness to innovate in this space– with some exciting results. **AI: Developing Smarter Insurance** [Artificial Intelligence and machine learning](https://www.financedigest.com/machine-learning-in-artificial-intelligence.html "Machine learning in artificial intelligence") technology is playing a major role in helping companies prevent injuries in some of the highest risk settings, such as manufacturing, energy, warehousing and distribution, and construction. This is down to AI [systems](https://www.financedigest.com/interoperability-of-data-to-accelerate-the-whole-slide-imaging-systems-market.html "Interoperability of data to accelerate the Whole Slide Imaging Systems Market") correlating data from a workplace environment with historical data on workplace incidents. Then, the technology is able to determine how best to prevent injuries before they happen. This use of AI is very timely, as [workplace accidents](https://www.financedigest.com/industries-with-the-most-workplace-accidents-and-workers-comp-benefits.html "Industries with the Most Workplace Accidents and Workers Comp Benefits") kill one person and injure 153 others every 15 seconds. Another innovative way AI is [changing the industry](https://www.financedigest.com/plaque-disclosing-aids-market-important-changes-in-industry-dynamics-during-2022-2028.html "Plaque Disclosing Aids Market Important Changes in Industry Dynamics during 2022-2028") is by the use of chatbots. These are computer programs designed to simulate conversation with human users. Chatbots work through messaging apps many customers may already have on their smartphones. [Insurance firms](https://www.financedigest.com/digital-marketing-for-finance-and-insurance-firms-is-changing-are-you-ready.html "Digital marketing for finance and insurance firms is changing — Are you ready?") can use chatbots to answer questions and resolve claims, as well as sell products, address leads or complaints, and make sure customers are properly covered by their insurance. The use of chatbots can help the [insurance industry](https://www.financedigest.com/nine-predictions-for-the-insurance-industry-in-2022.html "Nine predictions for the insurance industry in 2022") to be more efficient and understand its customers, which ultimately supports business growth. **The Future is Underwritten** Let’s look at underwriting – at the heart of what insurers do. This area of work can hugely benefit from AI. [Artificial Intelligence](https://www.financedigest.com/artificial-intelligence-in-banking-robo-advisors-and-beyond.html "Artificial Intelligence in Banking – Robo Advisors and beyond") has the ability to automate the entire process, by analysing a customer’s profile to find trends and patterns in his or her lifestyle. For example, someone who has a healthy life and steady job could be deemed to be a safer driver, which could lower [insurance premiums](https://www.financedigest.com/no-exam-term-life-insurance-premiums-explained.html "No-Exam Term Life Insurance Premiums Explained"). In reality, AI can analyse more data and patterns than human can, to more accurately predict risk, thereby providing customers with the right amount of [insurance needed to secure them against risks](https://www.financedigest.com/using-threat-intelligence-to-minimise-cyber-insurance-risks.html "Using Threat Intelligence to Minimise Cyber Insurance Risks"). Moreover, AI can far more accurately calculate appropriate [insurance premiums for drivers through telematics technology that can track the number of miles driven](https://www.financedigest.com/the-data-driven-future-of-the-insurance-industry.html "The data-driven future of the insurance industry") per week and whether drivers stick to stated speed limits or routinely speed. **[Driven by Data](https://www.financedigest.com/the-role-of-intuition-in-an-increasingly-data-driven-world.html "The Role of Intuition in an Increasingly Data-Driven World")** One constant driver in the [insurance sector](https://www.financedigest.com/how-process-automation-increases-productivity-in-the-insurance-sector-while-giving-employees-room-for-more-high-value-activity.html "How Process Automation increases productivity in the insurance sector while giving employees room for more high value activity") is effective use of data – it is the lifeblood of the industry. This will not change now, or in the future. However, we expect a [major shift](https://www.financedigest.com/how-to-best-protect-assets-following-major-global-shifts.html "How to Best Protect Assets Following Major Global Shifts") from using internal data to external data in the decision making process. Seasoned industry professionals feel that AI is set to shape how data is mined to [drive customer](https://www.financedigest.com/customized-innovation-to-drive-the-human-microbiome-market.html "Customized innovation to drive the Human Microbiome Market") experience. In case of [motor insurance](https://www.financedigest.com/the-road-to-digital-disruption-in-motor-insurance.html "The road to digital disruption in Motor Insurance"), AI has the ability to monitor road and traffic data,even predicting where road accidents could occur. Insurance [firms not using AI should consider this technology](https://www.financedigest.com/technology-trends-heat-up-for-financial-firms.html "Technology trends heat up for financial firms"), as it could shape the customer proposition, help customers select the right insurance cover, and drive customer satisfaction. **Job Creation in the AI Age** There is a perception that AI implementation will lead to [job cuts](https://www.financedigest.com/amazon-will-not-cut-jobs-in-italy-unions-say-after-meeting.html "Amazon will not cut jobs in Italy, unions say after meeting"). However, the reality is that [insurance companies do not predict a huge net job loss as the result of the ongoing expansion of cognitive computing systems in the coming](https://www.financedigest.com/being-aware-of-the-insurance-blind-spot-when-it-comes-to-driverless-cars.html "Being aware of the insurance blind spot when it comes to driverless cars") years. Our research into the job [market found](https://www.financedigest.com/omicron-found-in-europe-11-days-ago-jolts-markets-on-vaccine-fears.html "Omicron, found in Europe 11 days ago, jolts markets on vaccine fears") that insurance companies felt that AI could automate an average of 10% of the jobs in their own departments in 2016. Looking further ahead, they anticipate that an average of 14% of [jobs could be cut](https://www.financedigest.com/telecom-italia-in-talks-with-unions-on-up-to-2000-job-cuts-in-italy.html "Telecom Italia in talks with unions on up to 2,000 job cuts in Italy") in 2020 in functions using AI, and 18% of jobs could be automated in 2025 through AI in functions that use the technology. However, that projected [job loss](https://www.financedigest.com/irish-consumer-sentiment-dips-slightly-on-tech-job-losses.html "Irish consumer sentiment dips slightly on tech job losses") looks to be mitigated by some of the new roles these AI-related systems will create. Insurance executives predicted that AI resulted in average job increases of 8% in functions using the technology in 2016, and additional 10% more jobs in those functions in 2020 and 15% more by 2025 – in many new roles that don’t yet exist today. **The Future** In a world where there is arguably greater risk than ever before, there is a correlated need for the insurance sector to get smarter too. New products and services are needed to deal with areas such as natural disasters and [climate change](https://www.financedigest.com/stung-by-climate-change-drought-weakened-bee-colonies-shrink-u-s-honey-crop-threaten-almonds.html "Stung by climate change: drought-weakened bee colonies shrink U.S. honey crop, threaten almonds"), as well as the impact of an ageing population. AI can help in servicing these groups better, but also in finding ways of better-predicting the relative risks we face, helping to make the [insurance business](https://www.financedigest.com/business-insurance-what-does-it-cover.html "Business Insurance: What does it cover?") model more robust and profitable. Insurance is a relatively complex industry,but like any good technology, [providing cut](https://www.financedigest.com/french-cloud-provider-ovh-lines-up-diesel-generators-to-offset-potential-power-cuts.html "French cloud provider OVH lines up diesel generators to offset potential power cuts") through and simplicity is where AI shines. If we are to realise the great promise of AI in the sector, both the nimble startups and major established [industry players](https://www.financedigest.com/automotive-radar-market-key-players-industry-overview-applications-and-analysis-2026.html "Automotive Radar Market Key Players, Industry Overview, Applications and Analysis 2026") will need to embrace these tools. --- This blog is powered by Superblog. Visit https://superblog.ai to know more. ---