How Insurers Are Using AI in Their Operations
Insurers are using or plan to use AI up and down the value chain in their operations. It can help companies optimize their marketing dollars by predicting who will respond to which types of outreach.
It can also be used as a component to generate a property risk score, even though regulators frown on it being used as the sole or primary factor at arriving at such a score. “What you never want to use AI for is something that marginalizes or creates harm to any one group,” says Russell Page, CTO of Hagerty, an automotive lifestyle company and a leading specialty insurance provider for the global collector vehicle market.
However, he says, in the future, AI could be used to create a more personalized risk assessment for customers without using broad-based proxies for risk, such as someone’s credit score. Hagerty is exploring using AI around rating, claims and fraud detection, among other areas, Page says.
Indeed, AI can be used to process images and determine the cost of fixing damage, McElhaney says. It also can be used to detect fraudulent claims more effectively than human claims -adjusters can, according to McElhaney. Insurance claims experts are primarily going to rely on their experience to determine whether a claim is fraudulent. However, an AI-based tool can be trained on reams of data to determine common patterns of fraud.
“AI has the ability to discern patterns in ways and in data sets where humans simply cannot, or they simply just don’t have the capacity to look at ginormous data sets and tease out various patterns,” McElhaney says. “That’s what AI can do very successfully.”