Staid Insurance Industry Exploring AI With Some Caution
By AI Trends Staff
The insurance industry is dominated by massive national brands and legacy product lines that have remained largely unchanged for decades. It is a staid industry. This makes the industry ripe for disruption by new technologies and approaches, especially those enabled by AI.
Venture capitalists see an opportunity and are investing. New York-based Lemonade, started in 2015, has attracted $480 million in funding so far, according to Crunchbase. Lemonade, which started in homeowner and renter’s insurance, recently filed to go public. Released financial information shows the company has a way to go to become profitable.
Auto insurance, which makes up more than 40 percent of the overall business, is likely to shrink as self-driving cars come onto the roads and fulfill their promise of making driving safer, suggested a KPMG report in 2015. The consultants predicted the auto insurance market will shrink 60 percent over the next 25 years.
Three trends are likely to drive savings for auto insurers, brokers and policyholders, suggests a recent account in emerj .
Behavioral policy pricing , also known as usage-based insurance (UBI), exploits Internet of Things (IoT) sensors to provide personalized data to pricing platforms, so that safer drivers pay less for auto insurance and people with healthier lifestyles pay less for health insurance.
Customer Experience and Coverage Personalization , by for example employing chatbots to pull in customers’ geographic and social data to personalize interactions. Insurers are likely to allow users to customize coverage for specific items and events, in what is known as on-demand insurance.
Faster, Customized Claims Settlement , with virtual claims adjusters making it more efficient to settle and play claims, while decreasing the opportunity for fraud.
For behavioral policy pricing to work, consumers face a tradeoff: the need to give up a degree of personal privacy in exchange for lower premiums. For example, Neos Ventures offers smart home monitoring and emergency assistance IoT along with a home insurance policy. If the customer installs Neos cameras and sensors in their home, to make gas leaks, water damage and home intrusions less likely, they should save on premiums, is the idea.
Octo Telematics supports this trend in auto insurance by supplying its Next Generation Platform, with telematics data compiled since the company’s founding in 2002. The platform currently has six million connected users and more than 267 billion miles of driving data, collected over 473,000 crashes and insurance events.
Octo recently reached an agreement with the Insurance Corporation of British Columbia to launch a one-year project, Techpilot, for newly licensed drivers. The goal is to validate that telematics can modify driving...