Why using AI to minimize risk should be at the forefront of the insurance industry

By Van Carlson

The insurance industry has long been driven by data, but currently more than 40% of the time spent by underwriters is spent doing menial tasks. This results in billions of dollars lost over several years. However, there is a simple fix to this issue: artificial intelligence.

Thanks to the recent boom of AI improvements across the board, more companies in a variety of industries have begun to use it for streamlining basic tasks. This is especially needed in the insurance space, where AI usage can improve workflow and save companies money with little effort.

The incorporation of AI technology is a powerful tool to revolutionize underwriting and claim adjusting processes. AI's ability to aggregate vast amounts of data and extract valuable insights offers distinct advantages that human underwriters or claim adjusters may not consider. By harnessing AI's capabilities, insurers can enhance their efficiency and accuracy, ultimately benefiting the insured by streamlining operations and expediting claim settlements.

AI streamlines work and mitigates risk

AI can analyze vast amounts of data to assess risks more accurately and efficiently than employees who are simply going through the motions. Thus, the focus of an insurance company’s AI usage should be finding algorithms to determine premiums based on individual risk profiles. This not only enables more personalized policies and fairer pricing for the client, but it allows for the insuring company to save time.

Similarly, AI can be used to automate much of the underwriting process by analyzing vast amounts of data to assess risks more accurately and efficiently. By speeding up this process, insurers can achieve a quicker policy issuance to the client and reduce administrative costs, while also providing a more complete plan to the client. Risk mitigation is an important part of creating the best insurance plan for each policyholder, so the ability to analyze and decode data for plan personalization is key to identifying and preventing various risk factors.

AI-powered risk monitoring systems can proactively detect potential issues, such as product defects or network penetrations, allowing businesses to take preventive measures before they escalate into major problems. Additionally, AI can aid in the swift creation of incident response plans, serving as a valuable resource when risk events occur, and enabling businesses to respond promptly and efficiently. The predictive analysis capabilities of AI also allow insurance companies anticipate other customer needs, as well identify market trends, and optimize pricing and coverage strategies based on historical data.

But to harness the full potential of AI in risk management, businesses must approach its implementation with a cautious and thoughtful approach. Rigorous testing and validation processes are essential to ensure AI algorithms produce reliable and accurate outcomes. Moreover, maintaining human oversight and expertise is vital to review and verify AI-generated results, reducing the likelihood of potential errors and biases. By addressing these challenges and optimizing AI's capabilities, businesses can leverage its power as an asset in risk management, fortifying their resilience and safeguarding against potential threats.

Not only will AI continue to save insurance companies significant time, but it will also enhance the overall quality of workflow. Companies should be committed to integrating AI technology at its early stages, while also recognizing the immense potential for further advancements in efficiency. As AI continues to evolve and improve, so should we, by capitalizing on the latest developments to stay at the forefront of innovation.

Van Carlson is the founder and CEO of SRA 831(b) Admin. He may be contacted at [email protected].