# Leveraging AI for the Competitive Edge in Insurance  
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2022-04-22
Category: BUSINESS
Category URL: https://financedigest.com/category/business
Meta Title: The Impact of AI in Insurance: Accelerating Trends
Meta Description: Learn how the Covid-19 pandemic is driving insurers to embrace AI for efficiency, customer experience, and fraud prevention. Discover key AI use-cases in
URL: https://financedigest.com/leveraging-ai-for-the-competitive-edge-in-insurancehtml

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_By_ **_Kannan Amaresh,_** _Senior Vice President & Global Head, Insurance at Infosys_

The onset of the Covid-19 pandemic forced organizations across industries to shift to [remote working](https://www.financedigest.com/shoring-up-cyber-defences-in-the-remote-working-era.html "Shoring up cyber defences in the remote working era"), resulting in rapid and pervasive digitalization. [Insurers](https://www.financedigest.com/different-countries-different-insurance-cultures-how-insurers-can-adapt-their-products.html "Insurers"), too, are accelerating their AI adoption timelines to bring in efficiencies, support the distributed workforce, and sustain remote operations. AI is estimated to contribute as much as US $15 [trillion to the world economy](https://www.financedigest.com/deloitte-research-reveals-inaction-on-climate-change-could-cost-the-worlds-economy-us178-trillion-by-2070.html "Deloitte research reveals inaction on climate change could cost the world’s economy US8 trillion by 2070") by 2030.

**Avenues for AI in Insurance**

While there have been several pilot [implementations for AI in insurance](https://www.financedigest.com/dodge-a-bullet-with-the-insurance-act-2015-act-now-to-implement-two-way-communication.html "Dodge a bullet with the Insurance Act 2015: Act now to implement two-way communication"), enterprises are only just scratching the surface. The opportunity posed by the pandemic is giving impetus to deploy AI in insurance across areas such as:

- **Pricing**– Deep personalization enabled through AI makes policy pricing much more [competitive as insurers](https://www.financedigest.com/5-digital-marketing-tips-to-keep-insurance-companies-competitive.html "5 digital marketing tips to keep insurance companies competitive") are able to tailor premiums based on insights gleaned from a customer-centric focus
- **Claims handling** – Manual and time-consuming processes around claims management and payouts can be automated for faster time to market
- **Fraud [prevention](https://www.financedigest.com/payroll-fraud-and-how-to-prevent-it.html "Payroll fraud and how to prevent it")**– Fraud losses cost insurers nearly US $40 billion per year. AI can play a pivotal role in spotting abnormalities and identifying false information
- **Customer experience**– Applying AI models to customer data gives [insurers deeper understanding of consumer needs and facilitates ongoing support to reduce costs and improve](https://www.financedigest.com/improving-online-visibility-for-insurers.html "IMPROVING ONLINE VISIBILITY FOR INSURERS") customer experience

**The Speed-Accuracy-Trust Framework**

Until now, [insurers have been focusing their AI and automation initiatives to drive](https://www.financedigest.com/reasons-you-need-a-car-insurance-when-driving-in-thailand.html "Reasons You Need a Car Insurance When Driving in Thailand") efficiency outcomes. Looking ahead, the focus should [shift towards a framework that drives speed](https://www.financedigest.com/vw-to-speed-up-electric-shift-in-five-year-plan.html "VW to speed up electric shift in five-year plan"), accuracy, and trust. This will allow [insurers to differentiate themselves and provide a better customer](https://www.financedigest.com/should-insurers-buy-data-direct-from-their-customers.html "Should insurers buy data direct from their customers?") experience.

For instance, robotic process automation can help achieve speed. The explosion of data from connected devices along with increasing adoption of open [source and data systems will improve](https://www.financedigest.com/german-regulator-calls-on-allianz-to-improve-controls-source.html "German regulator calls on Allianz to improve controls – source") accuracy. Advances in cognitive [tech will drive trust](https://www.financedigest.com/how-can-banks-overcome-the-tech-trust-gap.html "How can banks overcome the tech trust gap?") by making AI understandable.

Insurers today are already experimenting with emerging technologies such as [big data](https://www.financedigest.com/big-data-suggests-leicesters-football-success-could-usher-in-economic-boom.html "Big data suggests Leicester’s football success could usher in economic boom"). However, areas like robotic process automation (RPA) and chatbots need more maturity to better [manage risk](https://www.financedigest.com/managing-corporate-currency-risk-the-cfos-balancing-act.html "Managing Corporate Currency Risk: The CFO’s Balancing Act") and enable cost-effective operations.

**AI in Three Key Insurance Segments**

The use-cases of AI in insurance must be designed specifically for its different segments, as each of these have unique operating models. The [success lever within each of these segments is the proliferation of partnerships among different players within the insurance](https://www.financedigest.com/predictive-analytics-a-new-way-of-insuring-success.html "Predictive analytics: a new way of insuring success") and technology ecosystem. These are driving some exceptional outcomes as described below:

- **Property and Casualty (P&C)**

This segment is replete with examples of partnerships aimed at enhancing capabilities for greater efficiency, faster time to market, and profitability. The key focus areas for AI in P&C are:

- Voice recognition, unstructured text, and machine learning
- Geospatial data
- Usage-based [insurance and life](https://www.financedigest.com/types-of-life-insurance.html "Types of Life Insurance") expectancy
- Drone surveillance and IoT

For example, USAA plans to acquire Noblr, an InsurTech company, to accelerate innovation with the right technology and enter the increasingly popular usage-based [insurance market](https://www.financedigest.com/a-look-ahead-to-2023-in-the-insurance-market.html "A Look Ahead to 2023 in the Insurance Market"). Another recent acquisition, that of Safeauto by Allstate, will add distribution capabilities that accelerate go-to-market while keeping costs in check.

- **Life and Annuity (L&A)**

Acquisitions and partnerships are helping traditional [insurers simplify](https://www.financedigest.com/how-artificial-intelligence-is-simplifying-sanctions-screening-for-insurers.html "How Artificial Intelligence is Simplifying Sanctions Screening for Insurers") processes and save time to achieve top line efficiencies. This aligns with the speed, accuracy, and trust framework. Moreover, the explosion in the [health data generated from wearables provides new opportunities for insurers](https://www.financedigest.com/are-there-tax-breaks-for-business-health-insurance.html "Are there tax breaks for business health insurance?"). Some recent examples include Swiss Re’s partnership with Appian that combines Swiss Re’s software with the workflow capabilities of Appian to increase efficiency while maintaining accuracy. In another example, Scor and HealthyHealth have entered into a partnership that captures ‘user well-being’ information from smartphones and wearables from HealthyHealth. This is then leveraged by the insurer to evaluate critical medical circumstances.

- **Commercial Insurance**

As a market that generated over US $690 billion in 2020, commercial insurance has become very competitive (1). In the wake of the pandemic, commercial [insurers need to reimagine their business models and accelerate customer](https://www.financedigest.com/5-ways-a-ccm-platform-can-help-improve-customer-engagement-in-insurance.html "5 Ways a CCM platform can help improve customer engagement in insurance") onboarding processes. They should also [identify the right sources of data](https://www.financedigest.com/new-gleif-challenge-facility-extends-ability-to-trigger-updates-of-legal-entity-identifier-data-to-all-interested-parties.html "New GLEIF Challenge Facility Extends Ability to Trigger Updates of Legal Entity Identifier Data to All Interested Parties") and understand how to leverage these efficiently. AI can play a crucial role in automating processes, reducing costs, and saving time. Data can be used to help predict customer behavior, understand preferences, and optimize [price and product offerings](https://www.financedigest.com/twitter-shares-cruise-towards-musks-offer-price-as-deal-deadline-looms.html "Twitter shares cruise towards Musk’s offer price as deal deadline looms"). It will also provide a comprehensive view of relevant and accurate information throughout the new business and underwriting lifecycle for faster decision-making. Various partnerships in this space have put customer experience at the core. For example, Lloyd’s agreement with geospatial InsurTech firm McKenzie Intelligence [Services enables faster payments](https://www.financedigest.com/igtbs-payments-services-hub-faq.html "iGTB’s Payments Services Hub – FAQ") and claim settlements for an enhanced customer experience. It has helped Lloyd build an advanced [digital and technology-led insurance](https://www.financedigest.com/insurers-beware-fraudsters-love-digital.html "INSURERS BEWARE: FRAUDSTERS LOVE DIGITAL!") marketplace.

**Conclusion**

With the right strategy and execution, AI has the potential to help the [insurance industry](https://www.financedigest.com/how-can-the-insurance-industry-avoid-having-a-kodak-moment.html "How can the insurance industry avoid having a ‘Kodak Moment?’") transform rapidly by leveraging capabilities like RPA, IoT and data analytics. Infosys has enabled several global insurance [majors to accelerate their digitalization journeys](https://www.financedigest.com/the-journey-towards-a-digital-bank-five-major-stages-to-successful-banking-digitalisation.html "THE JOURNEY TOWARDS A DIGITAL BANK – FIVE MAJOR STAGES TO SUCCESSFUL BANKING DIGITALISATION") through its platforms, solutions, and services. For instance, Infosys Nia leverages AI, ML and automation to improve insurer-client engagement and ensure return on investment at [reduced risk](https://www.financedigest.com/how-can-you-reduce-the-risk-of-fraud-in-b2b-payments.html "How can you reduce the risk of fraud in B2B payments?"). Infosys also provides tailored AI-powered products for commercial [insurance that help insurance carriers improve underwriting](https://www.financedigest.com/the-glorious-twelfth-what-underwriters-should-be-doing-as-the-insurance-act-comes-into-force.html "The Glorious Twelfth: What Underwriters Should Be Doing As the Insurance Act Comes Into Force") productivity, efficiency, and speed. It also facilitates accurate policy quotes based on the carrier’s risk appetite for [higher profitability](https://www.financedigest.com/polish-e-commerce-firm-allegro-eyes-higher-q1-profit.html "Polish e-commerce firm Allegro eyes higher Q1 profit"). Coupled with the speed-accuracy-trust framework, AI is set to help the insurance industry evolve and thrive in the post-pandemic world.

**References**

1. [https://www.globenewswire.com/news-release/2021/07/21/2266469/0/en/Global-Commercial-Insurance-Market-to-Garner-1-227-8-Billion-by-2028-Allied-Market-Research.html](https://www.globenewswire.com/news-release/2021/07/21/2266469/0/en/Global-Commercial-Insurance-Market-to-Garner-1-227-8-Billion-by-2028-Allied-Market-Research.html)


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