How Artificial Intelligence and Machine Learning Can Help Insurers
The insurance industry is reliant on a strong digital presence and detailed analytics, whether for marketing, risk analysis or the prediction of future events. An insurer who can adopt Artificial Intelligence (AI) and Machine Learning (ML) will gain an advantage over their competitors that will last for years to come.
Artificial Intelligence involves using computers to complete tasks such as learning and problem solving that traditionally require human intelligence.
Machine Learning is an application of artificial intelligence that provides the ability to automatically learn from the environment and applies that learning to make better decisions.
If we take the first example of marketing AI, and in this case, Natural Language Processing (NLP) is able to extract social media posts, reviews and threads that surround your company and your competitors. With this data, NLP tracks sentiment about customer opinion and their reactions to news stories surrounding your company. NLP can also do a deep dive into your competition to discover the feelings of their customers’ loyalty and will highlight any service flaws to enable you to win them over. This piece of AI is incredibly valuable in getting ahead of your competitors because in a field full of social analytics tools tracking basic demographics such as age, gender and location, the insurance market is poised to capitalize on this.
Balancing risk is integral to the insurance industry as it enables insurers to minimize the threat of exposure to potential clients. Using both AI and ML, insurers can predict risk which in turn reduces losses for their business. AI is able to determine the risk factor by scanning past history of a client, their sector and potential future factors from previous events to give the potential client a score. This score can then determine if the client is at low risk or a high risk enabling you to understand the best policy for you and your client. We can then use this data with ML to ascertain the optimum level of risk, increasing the accuracy and profitability of the business with each new client added to the program.
ML aids the prediction of future events. Knowing what can happen to a specific industry, an individual client or country is vitally important to understanding the effects on your business. For example, if as an insurer, your client is a Brazilian logging company that transports raw logs from the forest to the sawmill, and the outcome of a parliament vote to raises taxes on wood could potentially put the haulage firm out of business, it would be beneficial to be able to predict the likelihood of the bill passing in advance. AI and ML can help us here by inputting the factors that would affect the outcome such as the voting records of MPs, manifestos of both the major political parties and using NLP means that we can see what is being said in the native media. Using this information in ML, it will understand the subject at a number of levels of expertise, such as the views of politicians, commentators, the general public and an expert within the logging industry all in one place. This provides insurers a true understanding of the possibility of the outcome and how it will affect the logging company that is insured.
These are just three examples of the power of AI and ML in insurance and how it can aid you to get above your competition. From being able to acquire your competitors clients through applying NLP to marketing, using ML to better understand the risks of future and current clients and being able to predict the outcome of future events happening by creating a program that becomes an expert in multiple fields. Using AI and ML in your business will catapult you ahead of the competition, and it is always better to act now and be the leader in three years than still trying to play catch up in 10 years’ time.
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