You’ve probably heard by now: AI and cloud-based technology are the future of insurance. Customers want to be protected by their insurance and they want the interaction with their insurance provider to be as smooth as possible. With cloud-integrated products and customer data collection supported by AI, insurance companies are ready to move forward.
The cloud gives insurers the opportunity to capture customer data for a holistic view of behavior, preferences and risk level. AI transforms this data into actionable insights that anyone from agents to managers can use to make decisions. Insurers can deliver more personalized customer experiences while making the most profitable choices throughout the value chain, from issue guarantees to new product development.
As Accenture̵7;s CEO Julie Sweet has said, “The cloud is the enabler; data is the driving force and AI is the differentiator.” AI gives insurance companies the opportunity to gain increased business value from their cloud-based operations and their growing data volume.
Utilize AI to create value
In our 2019 Cloud Readiness Survey in Insurance, most insurance companies listed cost savings as a primary benefit of moving to the cloud. At the time, 90 percent of insurers said they had a long-term plan for technology innovation between companies. The Covid-19 pandemic exaggerated these plans. Cloud-based technology has made it possible for insurance companies to better meet customers’ requirements for digital first experiences and optimize the process of collecting customer data to be able to be used for greater personalization.
AI adds another dimension of value to the cloud, introduces automation and, perhaps more importantly, unlocks the power of data. With AI-supported data pipelines, insurance companies have also been able to optimize risk assessment and claims management. Applications for AI in insurance are still growing, but here are two key areas where AI can support cost reduction and growth:
Improve the customer experience with optimized offers
My colleague Kenneth Saldanha has noted that “in real time, personal recommendations in digital services have become ubiquitous … Insurance customers now expect that level of personalization to help them achieve better health and general well-being – especially millennial and younger consumers.” AI facilitates these experiences by using data to inform about personalization at each customer contact point. Even with an increased dependence on technology, customers still want human interaction. AI can support a better customer experience by providing the information and insights needed by insurers to recommend the right insurance products at the right time.
Insights into customer behavior can help insurers make better decisions about product development and pricing. With a continuous customer feedback loop, insurance companies can improve their current products and launch new offers with a clearer picture of customers’ demand and use. It can also help insurers optimize pricing structures based on customer behavior data. This saves time and money through the product development stages and increases the likelihood that new products will be successful.
Insurance companies that offer tailored experiences and products that are tailored to their customers see an 81 percent increase in customer balance and an 89 percent increase in customer engagement.
Improve the insurance value chain
AI has important implications for underwriting, policy administration and claims. With cloud-based data collection and AI-assisted analysis, insurers have access to a larger volume of high-quality information that helps them better assess risks and meet customer needs. AI is already reshaping underwriting and, in some cases, completely automating it.
People and machines can work together to reduce prejudice and determine the most profitable issue decisions. People bring intuition and previous experiences to their risk assessments. AI can provide deeper insights into the policyholder’s peer group and their personal history. In addition, AI can assess large amounts of data that extend to all areas of policyholders’ behavior and asset management. For example, AI allows insurers to process a large volume of assets such as vehicles and property or, in the case of employee benefits, schedules and benefit classes.
When it comes to policy administration, AI can add value for the customer while helping insurance companies collect better data to optimize policy offerings. Life insurance companies have already started using IoT and wearables to offer pay-as-you-live insurance. AI can increase the profitability of these products by aggregating data across platforms, better informing the customer experience and streamlining policy administration. In the field of telematics, use-based insurance allows insurance companies to reward trucking and commercial freight companies for safe driving.
A similar business model is also emerging in car insurance to speed up the claims process. Sompo Japan Nipponkoa Insurance uses AI to collect data from instrument cameras to assess damage and fault in collisions. The technology has made it possible for them to process claims in just one to two weeks. North American insurance companies such as Geico and Allstate are launching similar features that encourage safe driving for their car insurance customers, and use smartphones as electronic logging devices.
To drive your AI initiatives forward
The cloud adoption has been slow in the insurance industry, and so has the AI adoption. Ninety-four percent of insurance executives admit that they know how to pilot but struggle to scale AI across the entire business. Through our research, we have found several similarities between companies that can scale AI and start seeing business results from their investments. Insurance executives can use these insights to strengthen their AI initiatives.
Use the cloud to improve your data strategy
To return to Julie’s insight, an important benefit of the cloud is that enable data capture over channels. From employee performance to customer behavior, there is no shortage of data that helps inform business decisions and customer interactions. AI can not work with wrong information or information that is poorly organized. Data, as driver, underpins the success of your AI initiatives. Quality assurance, management and control of data over the cloud platforms you choose is crucial for a successful implementation of AI to support your business goals.
Many companies start with a cloud provider, but as they grow, they realize that they need to take advantage of the different opportunities offered by other providers. Your cloud management strategy must give you access to and assess ever-changing data sources for maximum visibility, including third-party data for a 360-degree view of the customer. It is important to develop a multi-cloud strategy from the beginning to ensure that your data strategy remains scalable.
Customize AI initiatives with business priorities
As with most technology transformations, an AI initiative should be an iterative process. Accenture research found that 70 percent of companies that (continuously) successfully scale AI projects link their AI goals to their business strategy. These companies choose a focus and stick to it. AI can solve many problems and deliver value in almost every area of the business. Avoiding range creep and making sure you have the right expertise to get the job done is imperative to see results from AI.
Focus on adoption and skills development
Once you have established a link between how AI will help your business achieve its core goals, it is important to evangelize the benefits of AI throughout your organization. In Accenture’s own cloud adaptation journey, we discovered that a focus on technical education and upbringing made it possible for us to achieve our goals. We have also found that insurance companies that identify themselves as low users when it comes to cloud technology mention a lack of expertise as the main obstacle to success. Middle and high-end users also cite misalignment between IT and business as the third most pressing battle in their AI initiatives. Ensuring that you have attitude and understanding throughout the organization will help you stay agile and pull in the same direction toward these business goals.
Develop a cloud-based culture and democratize AI across the workforce
To emphasize the point above, Accenture has also found that enterprise-wide customization is the cornerstone of AI implementations that drive business results. We have found that 92 percent of companies that have scaled and achieved repeated success utilized platform-independent, multidisciplinary teams. AI is nothing new; that’s how business will be done. By making the benefits of AI and cloud features available to all team members, you can take full advantage of the data and insights that these technologies unlock.
If you’re looking for more information on migrating to the cloud and creating value with cloud-based technology, read Reimagining insurance: The new cloud imperative, a report I co-authored recently that focuses on guiding insurance companies’ cloud strategy. We have also developed an AI emergency insurance quiz to help you get an idea of your company’s current state so you can take the next step on your AI activation journey.
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Disclaimer: This content is provided for general information purposes only and is not intended to be used in consultation with our professional advisors.