In today’s fast-paced world, the role of digital technology is steadily rising in the insurance industry. With the advancements in data science, it’s becoming easier to create unbiased models that play a part in decision-making and claims processing. In the midst of the coronavirus pandemic, Friss describes how prioritizing customer satisfaction and building trust is essential. Employing digital tools to process applications and boost self-service means that AI and machine learning are being further developed for this purpose.
Risk Management
Fraudulent claims are a major issue that plague insurance companies. To combat this, HP’s Tech Takes explores how blockchain technology can be used to track ownership and prevent fraud. For instance, it can help verify the existence of a death certificate before an insurance claim is processed. Furthermore, determining the provenance of high-value assets can be a difficult task. They describe how Ethereum has developed a programmable blockchain and “smart contract” technology that can encode items and assets for protection. Keeping track of sales can help create a solid claim to ownership, which can aid in the appraisal process. Finally, data science can derive important insights from all of this secured data which can build greater transparency and trust among shareholders.
Pricing Optimization
Along with the rise of climate change, the price of insurance is becoming less affordable for many customers. Changing weather patterns have lead to increasing damages caused by weather-related disasters, such as floods and fires. In order to reduce insurance premiums and optimize their pricing strategy, FinTech magazine narrates how insurance companies can turn to AI for a solution. Using analytics, companies can take a look at historical weather records, insured property data, and make predictions on future climate conditions to improve risk selection and pricing. In addition to the rising number of Internet of Things (IoT) devices around the world, such as drones companies and institutions can keep a closer eye on the impacts of global warming.
Customer Intelligence
These days, staying competitive and targeting customers effectively is something all industries need to consider. To give your company that extra edge, Research from International Journal of Information Management describes how prescriptive analytics combines AI and machine learning to maximize sales and profits. Beyond just providing information, prescriptive analytics recommends steps you should take to optimize an advertising campaign or existing insurance plan to be the best that it can be. Automation can help determine which groups of customers to target, including which products and discounts are most likely to appeal to particular segments. Even something as simple as the time of day can have an impact on the most appealing price for an insurance plan.
Data Governance
When it comes to a technology that is relatively new and difficult to understand for the average person, it’s easy to be mistrustful of its results. As insurance companies start to integrate data science into their decision-making processes, Monte Zweben examines how understanding the framework that lies behind these models is vital for all personnel. Regulators will need companies to explain the inner workings behind the denial of a claim or an insurance policy, especially if the technology is used to determine premiums and pricing. Ensuring that this technology is non-discriminatory in nature should also be a priority moving forward. Data governance should provide greater visibility into how these models were created and modified over time.
To help insurance companies become more data-driven and efficient, integrating new systems such as blockchain, artificial intelligence, IoT, and machine learning will take some time to get used to. Discovering the potential of these technologies and how they can contribute when it comes to calculating risk is a major challenge that many insurance companies will soon face. However, those who take the first steps to embrace this new technology may gain that slight competitive edge in a hyper-saturated industry.
About the author
Alexa Daniel is a full-time writer who specializes in writing about up and coming technology trends in business and finance. In her spare time, she enjoys watching foreign films and working on her photography skills.
