Artificial intelligence (AI) has been making headlines recently with the likes of ChatGPT gaining a lot of attention. But the truth is that AI has been quietly impacting our lives for years. If you’ve ever asked Siri a question, told Alexa to play a song, or used a chat feature on a website, you’ve interacted with AI. Without a doubt, AI is impacting the way we live, work, and spend.
The insurance industry is no exception. Insurance companies are integrating the technology to improve their own accuracy and efficiency while also using it to improve the experiences of their customers. Together, both sides of the industry’s AI application make for better and more meaningful interactions between companies and their customers.
Here are some of the ways the insurance industry is using AI to add value.
Insurers have always segmented customers by risk categories and priced coverage accordingly. Since AI can quickly process huge amounts of data, its ability to identify trends and create predictive models is a huge time saver for companies. As better information and data-driven insights are returned, insurers can apply those results to create more accurate and relevant pricing for customers.
AI is a sophisticated profiling resource that bases its predictions not only on your preferences and past behavior but on that of thousands of others who fit similar characteristics. The larger the data set, the more accurate the predictions become. Insurers then use AI’s findings to customize communications, reach prospects at trigger points in their lives, and even introduce clients to new products or services they may need down the road. Ironically, this personal touch is propelled by a machine, yet it helps customers and the company connect at the right time for the right reasons.
AI technology excels at identifying patterns and detecting fraud early. Insurers are using it to help secure customer information, prevent identity theft, and vet applications that seem unusual. Increasingly, companies are relying on AI for biometric identification, voice and image analysis, and two-way information sharing with law enforcement to uncover anomalies or discrepancies worthy of further investigation.
Vast amounts of information are created and crunched daily. AI helps insurers parse the most relevant bits to stay on top of industry activity at a high level, but also at levels of increased granularity. For example, as life insurance benefits are paid out across certain age groups, AI can drill down and analyze the correlation between those age groups and different professions. Or AI can spot trends related to how customers in Tuscaloosa use life insurance policies differently than customers in Traverse City. The speed by which information can be computed and recomputed helps pinpoint gaps and shortcomings but is also instrumental in identifying opportunities to create the most useful products and tools for customers.
Smart watches, fitness trackers, and various apps can help customers to monitor their own health statistics. Through the data they collect, insurance companies can customize products to reflect a person’s current health and behavior. To encourage better habits, insurers may incentivize customers with behavior-based discounts as well as real-time updates to ensure their coverage and premiums are always the best they can be.
When a claims event occurs and a customer is waiting for their file to be processed, every day matters. By avoiding human backlogs or errors, AI can accelerate the speed, accuracy, and efficiency of the process so customers get the settlement money they need faster.
Diversification is a hallmark of sensible portfolio management, and AI can recommend ways for insurers to rebalance, spread risk, and capitalize on trends and opportunities for improved investment returns. Putting AI to work can result in stronger buy/sell outcomes and, ultimately, better and more transparent pricing for customers.
As AI continues to be folded into all the layers of our lives, the customer experience is bound to become increasingly personalized, customized, and contextualized. Consumers will feel more seen and understood, and products will seem to suit each individual more completely. Insurers are more able than ever before to meet customers exactly where they are in life and help them protect what matters most in the best ways possible. Working with a New York Life financial professional means you are working with a company that strives for all of these advances for your best interest in mind as well as the personal touch of a dedicated and experienced insurance professional.
This article is provided for general informational purposes only. Neither New York Life Insurance Company, nor its agents, provides tax, legal, or accounting advice. Please consult your own tax, legal, or accounting professional before making any decisions.
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