The profound impacts of AI on insurance, Pt. 2

Last week, we learned about some of the profound impacts that AI is already having upon the insurance industry. As we embrace AI software and data, we transform the way risk assessment is done, therefore gaining more accurate judgements of a customer’s risk profile. This is beneficial to both the insurer and the insurance policyholder.

But what about some ways that AI’s incorporation might be impacting personal lines’ insurance? We’ve detailed, in the past, how AI could be impacting businesses, but what about the policies that almost all of us possess? Auto insurance? What about home insurance?

Artificial intelligence has the capacity to greatly change the way we interact with the world. Here’s how it might be impacting your personal insurance.

AI and auto insurance

Frustrated by ever-increasing rates? So many external factors have been impacting auto insurance rates as of late – not just in Quebec, but in all of Canada. AI may be the thing that makes a different in auto insurance. See, as innovation begins to reach new heights and autonomous vehicles start to hit the streets, we’ll see a whole new way of calculating insurance risk for automobiles.

Move aside, electric vehicles. Coming in the next few decades (or even sooner) are autonomous vehicles. These vehicles are designed to be entirely or partly autonomous, and they use technology to essentially follow plugged-in coordinates to a destination while monitoring the road around them for speed maximums, proximity alerts, obstacles, and more – all to keep you safe so you can arrive in no time. These autonomous vehicles are set to solve so many issues in the driving world, from bad driving causing accidents, writing off vehicles and severely injuring or even killing people, to helping us get to where we want to be in good time.

We can account high insurance rates, in part, to the number of claims made. The more claims made, the more insurers will have to charge in order to add to their “pool” of payout money. But with autonomous vehicles, the only risk is manufacturer error. We eliminate human error entirely.

Ideally, there’d be less accidents, less collisions, and as we embrace AI and data, there will be more seamless customer experience. At that point, auto insurance may be less about dealing with other drivers than it would be making claims against manufacturers for errors and mistakes.

AI and customer experience for auto insurance

With AI, the ways we interact with our service providers has changed. When was the last time you picked up a phone to call a service provider and it went directly to a human employee? Probably a long time, right? That’s because many companies have embraced the ideas of handing off basic tasks to AI to free up human employees for more complex tasks.

Imagine you got into an accident. You’d have to call up your insurance provider to submit a claim, right? What if, by the time you got out of your car to assess the damages, your car had automatically gauged the damage that was done, where the accident occurred, and weighed the overall repair value, and submitted this off to your insurance provider? How easy would that be?

That could be possible with AI in the future. In the insurance industry, there’s already a huge issue with how long it takes to get a claim settled, what with all the middlemen. What if we eliminated those middlemen and got right to the point? AI has the potential to do that.

AI and home insurance

Have you heard of a “SMART Home?” You’ve definitely heard of a smart phone – but get a load of this one: many people are futurizing their homes with technology that enables their homes to use automated systems that perform basic household tasks. SMART homes can monitor temperature, man security surveillance systems, and so much more.

How does this transform home insurance? Well, homes that are fit with SMART home features may be rewarded by insurance companies with discounts for the incorporation of the systems they use to keep your home safe. Homes that are installed with SMART monitoring systems may be less prone to catching fire and theft attempts can be nipped in the bud.

This isn’t all. See, with AI technology, insurance companies can begin using postal codes and GPS positioning to accurately gauge a person’s property’s risk. Your location is a huge factor in the premiums you’ll pay, but if the area where you live has a lot of homeowners making a high number of claims, you’ll probably pay more for your insurance.

With a new process known as geolocation accuracy, the insurer can view where the policies are located down to the building or parcel level and get more accurate information on their proximity to a variety of different kinds of risk. This means policies are priced more accurately. You won’t have to pay for your neighbour’s high claim rate.

In conclusion –

As you can see, AI implementations will change the way we think about insurance. Software can increase productivity in insurance processes (like claims and underwriting) and reduce operational expenses for the insurance carrier significantly. Moreover, AI has the potential to boost customer experience, productivity, and business resilience as it transforms and learns to analyze more complex data with each advancement. Change isn’t always a bad thing – maybe it’s time to start embracing the future of businesses, of insurance, and a majority of other aspects in our lives.