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The Robots are Coming. Are you Ready?

Would you buy your next insurance policy through an online chatbot? Would you wire your home up to monitored sensors and cameras so you could save on your monthly premiums? Would you turn over your facial and biometric data for cheaper medical aid or life policies?

Experts are warning that Artificial Intelligence (AI) and the Internet of Things is likely to affect the entire landscape of the insurance industry as we know it. Change is here, more is coming.

Three key ways that AI will drive savings for insurance carriers, brokers and policyholders:

Behavioral Policy Pricing: The Internet of Things (IoT) sensors will provide personalized data to pricing platforms, allowing safer drivers to pay less for car insurance (known as usage-based insurance) and people with healthier lifestyles to pay less for medical aid cover.

Customer Experience & Coverage Personalization: AI will enable a seamless automated buying experience, using chatbots that can pull on customers’ geographic and social data for personalized interactions. Carriers will also allow users to customize coverage for specific items and events (known as on-demand insurance)

Faster, Customized Claims Settlement: Online interfaces and virtual claims adjusters will make it more efficient to settle and pay claims following an accident, while simultaneously decreasing the likelihood of fraud. Customers will also be able to select whose premiums will be used to pay their claims (known as peer-to-peer (P2P) insurance).

Here are the three ways that AI will enhance the insurance buying experience:

Chatbots Will Recognize You: Advanced image recognition and social data can be used to personalize sales conversations.

Platforms Will Verify Your Identity: Automated personal identity verification can speed authentication necessary for quoting and claiming.

Insurers Can Customize Your Coverage: Machine learning can allow a fully online or app-based shopping experience.

AI is going to revolutionize the way insurers gather information about you which in turn will affect how they evaluate your risk profile.

The South African insurance industry is highly regulated in order to protect both customers and insurance companies, but the regulatory framework has not kept up with technological developments. South Africa (as well as other countries) does not have any laws that deal specifically with AI.

This raises the question as to what will happen when an insurance company using AI rejects a claim and what the right of recourse afforded to the client would be.

An insurance company currently using an AI chatbot to handle claims has indicated that should a claim be rejected, reasons for the decision will be made available, and in most cases, the reasons for rejecting the claim could be resolved.

Should the issue not be resolved, and an insurance claim is rejected as a result, the client would need to use the current avenues available to them, such as the Ombudsman for Short-Term Insurance, to resolve the dispute. After the claim has been rejected and a client has escalated the claim to the Ombudsman, it is likely that the insurance company would also have to re-evaluate the claim themselves to determine if the AI was correct in rejecting the claim. Disputes such as these will be ground-breaking for South Africa and will hopefully lead to an updated legislative framework that promotes innovation.

Whether it’s telematics, self-driving cars, chatbots or monitored smart homes, it’s ultimately likely customers will move towards insurers who’re able to best harness Artificial Intelligence to improve their customer experience, as well as their claim-management process.

Most customers judge the performance of insurance products when they need to be paid, not when they make their purchase. But buying insurance, or filing a claim, with just a few clicks of a mouse has undeniable appeal …

* This article is provided for informational purposes only and should not be construed as legal or financial advice. 

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