It sounds like science fiction, but artificial intelligence (AI) is already changing the way we work, live, and play—but it’s also beginning to transform some of our oldest and most traditional industries. Life insurance—perhaps the most conservative industry in existence—is facing its own digital disruption.
Life insurance companies are now racing to adopt AI technologies like machine learning and natural language processing to churn through mountains of data in an effort to better predict policyholder behavior and present a more personalized experience across all channels. This data-driven approach to life insurance is helping these companies overcome their biggest hurdles—adapting their sales and marketing strategies to suit the digital age and improving their claims processing speed to meet the growing demand for their services.
So, if you too are a life insurance company looking for your next step towards digital transformation, here are five ways AI can prove its worth for you. And though this adaptation is just beginning to take shape, it’s already transforming the industry—and our lives—for the better.
Table of Contents
1) Accelerate Underwriting Process
One major challenge that life insurance companies face is the time it takes to underwrite policies. It’s a manual process that requires a fair amount of paperwork and information to evaluate risk. This process can take days, sometimes weeks, which makes it difficult to scale up operations.
AI can help accelerate this process by using algorithms to calculate risk based on data from various sources. AI has access to large amounts of data from unstructured sources such as social media, medical records, wearables, and more, drawing patterns from this data and creating models for underwriting policies. For example, suppose a person is at high risk for diabetes based on their diet and lifestyle. In that case, the algorithm will recommend higher premiums for health insurance or reject the policy altogether for life insurance.
And for individuals who don’t have any known risks (yet), an AI-based system can speed up an application and quickly approve coverage. This means faster turnaround times, which translates into faster processing rates for companies—allowing them to scale up their operations much quicker than before.
2) Customer Service
Many insurance companies do not have the tools or data available to fully understand their customers’ needs and provide tailored solutions. AI helps insurers understand their customers’ questions and needs and their preferences in coverage types, pricing, and more. Using this information, insurance companies can deliver a user experience that’s tailored to each individual customer. This will lead to increased customer satisfaction, which will help drive your business growth and increase revenue.
Moreover, by integrating AI-powered customer service solutions, insurance companies can provide their valued customer’s around-the-clock service and immediate response—helping them retain policyholders and keep up with client demand. With an automated solution built on deep learning capabilities, insurance companies will be able to personalize communications for individual customers based on what they know about him/her from past interactions.
Automated personalization also helps build brand loyalty through enhanced emotional engagement between AI agents and customers while empowering customer service representatives (CSRs) to turn their attention to more complex customer inquiries.
Some examples of where AI can help include:
- Chatbots that answer customer questions 24/7, freeing up CSRs’ time to focus on more complex tasks.
- Appointment scheduling that uses AI to suggest open slots in CSRs’ calendars and route customers to appropriate departments based on their needs.
- Intelligent email routing that automatically places emails in the right queue based on the content of the message, so they are directed to the right department and handled more quickly.
3) Improve Distribution Effectiveness
Life insurance companies are finding it more and more challenging to grow their business in today’s competitive marketplace. The traditional model of distribution has worked for decades, but customer needs and behaviors have evolved faster than the distribution model. As a result, life insurance companies need to accelerate their efforts to modernize their distribution model through an innovative customer experience, end-to-end digital sales process, and personalized product offerings.
Artificial Intelligence (AI) is uniquely positioned to help life insurance companies improve their business outcomes by enhancing the customer experience and increasing customer acquisition, cross-sell and upsell. AI can enhance customer experience by helping life insurance companies deliver more relevant products based on a deep understanding of the customers’ needs and behaviors. In addition, with conversational interfaces and personalized offerings, it can also personalize communications for individual customers so they can make informed buying decisions faster. This means more leads and sales through digital channels, which translates into higher profits while improving customer retention at scale.
4) Improve Claims Processing
Most life insurance companies have a slow, inefficient claims process that is frequently frustrating to the end-user. This leads to low customer satisfaction and churn rate.
One way that artificial intelligence can help is by collecting data from the claim forms submitted by customers and using it to predict the type of case they have submitted. For example, a new customer might submit a claim form because their loved one passed away unexpectedly. The life insurance company will ask them questions about details such as age and cause of death in order to determine whether or not it’s a legitimate claim for benefits.
AI can automate much of these questions, allowing claims processors to assess cases more quickly than before—and reduce inaccuracies as well. The machine learning algorithm would use this information along with other company-defined attributes and determine whether or not it should be flagged for review by an employee. This saves employees time so they can focus on reviewing and approving complex or high-risk cases while low-risk ones are automatically approved based on collected data. This prevents further claims from being rejected due to errors made during data entry processes, meaning fewer denials for customers and lower operational costs for companies.
5) Personalized Insurance Products for Greater Satisfaction
Life insurance companies have long focused on offering products and services to consumers based primarily on their physical attributes. But we live in a world where consumers expect personalization. This is especially true of millennials, who will make up the majority of the workforce by 2022.
What these young adults are demanding is more than just a one-size-fits-all life insurance policy. They want customized products designed specifically for them. And they want these products delivered to them in a way that is seamless, transparent, and secure.
Matt Schmidt of Diabetes Life Solutions tells us “Insurance companies are looking for specific markets to target using AI technology. One market is life insurance for type 1 diabetics. Companies can ‘pull’ the necessary background information on applicants to speed up the underwriting process.”
Enter artificial intelligence (AI). By providing more personalized products to consumers, AI gives life insurance companies a chance to grow their business at a time when many people are reluctant to buy life insurance. In fact, growth opportunities for insurers may be even greater than generally thought as new technologies such as AI and other advanced digital capabilities emerge— and can be used in new ways to provide benefits that resonate with today’s customers.
In conclusion, artificial intelligence will be an integral part of our lives in many ways. Over time, it is expected to become a driving force behind technological advances and innovations in various sectors. And the sooner companies realize this, embrace it, and create new products or services that leverage these capabilities today, the better off they will be when disruptive technologies take hold.