ARTIFICIAL INTELLIGENCE & TECHNOLOGY
5 challenges of Artificial Intelligence for the insurance industry
27 April 2022 · By Ana Navarrina
Are Artificial Intelligence and the insurance sector a match? More and more companies are integrating this technology into different tasks of their processes. As a result, the sector already has a number of use cases around the world.
However, the following is true: insurers do not want to lose the human touch with the customer. For this reason, they are looking closely at the intervention of Artificial Intelligence in their processes. This is partly positive, because it is a sign of the ethics and commitment shared by the sector; on the other hand, it may mean a slower adoption than in other industries.
Therefore, technology or insurtech companies developing AI find themselves in a demanding terrain, where their product is new and often unknown, facing the following challenges:
The not-so-almighty AI
Everyone is talking about Artificial Intelligence. A scroll through your LinkedIn feed and you'll probably find five or six posts around this topic. It's understandable: it's broad, it's juicy, it's futuristic, and it's constantly evolving.
However, sometimes, when something becomes so popular, there is a lot of nonsense being said about it. Around AI, an atmosphere of little knowledge and a lot of fantasy has been built. There seems to be no limit to what this technology can do and automate. As a result, when presenting an AI product to insurers, it can sometimes seem "scarce" or "not very futuristic." It is up to us insurtechs to be very pedagogical and confront these fantasies with well-founded success data to prove that, in AI, what is simple and understandable is often the most profitable and beneficial.
Wrong place, wrong time
The entrepreneurial sector always talks about the value of learning by making mistakes. However, more than a few insurers have integrated AI into their processes at more immature stages and have had a poor experience. Product maturity and reliability will have to be part of the insurtech discourse to break this barrier.
The algorithm, that stranger
Sometimes it is difficult to explain why the AI algorithm has made a particular decision without getting into too technical a territory. However, it is natural for insurers to want to know the decision process, the reason behind choosing one estimate and not another. What has it been based on? How can we be sure that it is not wrong, or that there has been no error?
The challenge will be to turn the algorithm into something transparent and explainable to the customer, to establish communication channels that bring them closer to its operation and therefore generate trust.
The technology train
Once implemented and in operation, AI soon makes its presence felt. The benefits are often evident and the commitment to this technology is applauded and praised. However, to keep pace with the benefits that AI brings, different business areas have to adapt their processes and teams to a new environment and new methods. If the insurance company in question does not make these changes in time, the benefits brought about by AI will not be of use.
This small effort is well worth it, as it pays off quickly when it comes to market competitiveness and cost and time reduction: it is simply a matter of having the right technology partner.
AI and Business, the mismatch
We can count on a fantastic team developing cutting-edge technology, which is incredible. However, this will be of no use if we have not been able to identify the opportunities within the business. It is essential that insurtech and insurer work hand in hand when it comes to developing this technology, because AI must be built from a perfect understanding of all the processes, barriers and advantages of the business as it is operating.
Each of these challenges has, in reality, the same basis: building trust. It should not be forgotten that in the insurance sector, Artificial Intelligence will be deciding on such important aspects of the insured's life as their home, or the vehicle they use every day to get to work. Insurers are going to think twice before betting on AI. However, once they take the plunge, they will discover the wonderful world of automation and will see the number of benefits they can offer their policyholders thanks to it.
Building trust in AI is, therefore, the ultimate and exciting challenge for the companies that develop it, as is the case of Bdeo and the cutting-edge Visual Intelligence it develops in Spain and which is already enjoyed by large clients in the insurance sector around the world. Because Artificial Intelligence, properly applied, is always welcome.
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Artificial Intelligence in general, and Visual Intelligence in particular, are very present in our days. Perhaps, much more than we imagine.