Everyone is using AI. Insurers today are either actively experimenting with AI, partnering with an AI-powered InsureTech startup, or are unknowingly benefitting from AI through third-party relationships.
However, the term “AI” is often misused and misunderstood, which can make it difficult for an IT leader to pitch an AI initiative to an already skeptical business team. The broad scope covered under the umbrella of “AI” can cause confusion, particularly because many vendors mislabel their software as AI to fit their offerings into this trendy category.
To help insurers better understand the differences between various AI functions, Novarica recently published a brief to highlight specific AI applications in different areas of the insurance value chain. For insurance, AI usage can be broken down into four major categories: machine learning, image recognition, audio recognition, and text analysis. Novarica’s Three Levers of Value framework further conceptualizes the value of these AI applications in business terms—namely, Sell More, Manage Risk Better, and Cost Less to Operate. Each of these Three Levers can be applied to different AI technology use cases, such as AI to help identify new customer groups (Sell More), AI to accelerate risk assessment (Manage Risk Better), and AI for intelligent claims processing (Cost Less to Operate).
The AI use cases highlighted in this brief span seven key insurance business areas—product/actuarial, marketing, underwriting, customer service, billing, claims, and compliance. Key use cases include:
- Deploying better pricing models.
- Improving marketing effectiveness.
- Performing better property risk analysis.
- Leveraging smart home assistants to deflect calls from call centers.
- Increasing invoice processing speeds.
- Identifying and mitigating claims fraud.
- Enabling automatic handing of compliance requirements.
With the AI ecosystem growing every day—and the promise of potential further speedups through quantum AI and machine learning—insurers looking to invest in AI technology should seek out use-case-driven AI projects that have the greatest potential to help the business Sell More, Manage Risk Better, and Cost Less to Operate. Insurers looking to implement multiple AI use cases may benefit from partnerships with many different InsureTech startups, consultants, and AI-powered technology platform vendors.
For more on this topic, check out the full report, Artificial Intelligence Use Cases in Insurance, and our featured article in Insurance Thought Leadership.
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