Artificial intelligence, or AI, is transforming the insurance industry, leading the way in revolutionizing tasks that were traditionally performed by humans, such as visual perception, speech recognition, decision making, and language translation. Virtual assistants such as Alexa and Siri are familiar examples of how artificial intelligence (AI) is used in everyday life, capable of performing tasks like calling a contact, setting an alarm, or playing a song through simple voice commands. By utilizing AI in Insurance, the industry is witnessing a profound transformation, leveraging technology to meet evolving customer needs and redefine the standards of service and efficiency.
AI in Insurance is rapidly gaining popularity across various industries, aiming to streamline processes and automate repetitive tasks, which in turn saves time and resources. Insurers, striving to stay competitive in the marketplace, are leveraging AI in Insurance to enhance customer experience and satisfaction. This adoption of AI enables faster, more cost-efficient, and accurate services, providing a significant competitive edge.
Claims handling, which is both a critical and time-consuming part of an insurer’s duties, stands to benefit immensely from AI in Insurance. The technology offers a way to improve the accuracy and efficiency of claim processing, especially for minor claims. While the automation of claims handling through “AI in Insurance” seems like a win-win for both insurers and policyholders, it’s important to remember that there are always risks involved.
According to conroysimberg.com, the U.S. sees $308 billion paid out annually due to fraudulent claims, with property and casualty insurance making up about $45 billion of that total. The industry has been battling against false identities, misleading documentation, and fraudulent claims for decades. The rise of self-service automation and straight-through processing (STP), especially during recent years and the Covid lockdowns, has made fraud more prevalent. Claim adjusters are increasingly relying on evidence provided by policyholders themselves.
The submission of insured-produced evidence raises concerns, particularly with the growing use of AI-produced deepfakes and shallowfakes. These technologies can digitally alter a person’s appearance in photos or videos, or use basic editing tools to falsify documents like driver’s licenses or photo timestamps. Such alterations can flood insurance companies with false claims.
Despite these challenges, the convenience of self-service features like customer-supplied photos is something both customers and insurers have come to expect and are unlikely to give up. To combat the frequency of fake claims and falsified information, insurers are implementing AI-powered detection tools, such as “document forensics,” into their claims processes of “AI in Insurance”. These tools help identify false documents more effectively than humans can. AI can scan thousands of claims for duplicate submissions, use face recognition to verify the authenticity of a claim, and increase the accuracy of claim processing by identifying honest human errors.
By combining AI in Insurance tools with human instincts, attention to detail, and the knowledge to check the authenticity of submitted documents, insurers can significantly reduce fraudulent activity, potentially saving billions of dollars. Although these technologies represent a substantial investment, the increasing number of false claims each year suggests that it may be a worthwhile expenditure.
