How Automation Is Changing The Insurance Industry

The insurance industry is an extremely lucrative one and for good reason. It is accepted by many experts that our economy as we know it came to be due to the concept of insurance. Insurance took abstract concepts and quantified them, to the extent that we can calculate the monetary value of something like risk. It is due to the complexity of insurance that it is an industry that utilizes many knowledge workers. Things like risks need to be calculated for the sake of premiums by an insurance underwriter, which is a specialized position. But since insurance has done such a great job at quantifying concepts formerly considered qualitative, automation is the logical next step.

In this context, the fact that automation is already changing the insurance industry is unsurprising. While this may not seem like the best news for knowledge workers in the insurance industry, it actually opens up space for these people to innovate new products and execute them with ease.

Here are the ways in which automation is changing the insurance industry.

The Claims Process

Disruption to an industry is crucial in order to keep it evolving. However, for such established industries worth hundreds of billions of dollars, the natural starting point in automation comes in the form of improving services. After all, there are already excellent products that help millions of people every day. It is delivery that is sometimes lacking.

In theory, insurance should give people a huge amount of peace of mind. To a large extent, that’s what they’re paying for. However, most people still feel a huge sense of financial foreboding when something goes wrong. Their car is damaged in a collision and, instead of focusing on moving forward, they have to figure out how to bring insurance on board.

Automation is already changing this for many forward-thinking companies. Instead of having to jump through hoops for the sake of claims workers, automation allows customers to process their claims with ease. They do so online or from an app, and the money lands in their account in no time.

The reason this has not yet transformed the way we claim from insurance is because most insurers do not yet trust their automated processes. They fear that claims will be paid out accidentally, and therefore keep a human hand involved.

But this does not need to be the case in the insurance industry. After all, it is the industry that quantifies risk. The risk of mistakes caused by automation can be quantified and accounted for in financials. When insurers are more comfortable doing this, claiming from insurance will become easier than ever.

Calculating Premiums

Automation has also come into play in terms of calculating premiums. We see this on insurance websites which provide quotes automatically after taking some basic information from you. It is already possible in many cases to start signing up for insurance and accepting the premium on offer based entirely on automated processes. But as with claims processing, the trust is not entirely there yet from either side.

It is hard for both insurers and customers to trust automation in this regard. The reality is that AI can’t quite understand human experience. We all worry that AI will make callous decisions based on what it sees as the simple facts.

However, humans are far more likely to make mistakes precisely because we are prejudiced in how we see certain factors. Automation is great for both parties because no one is being taken advantage of when cold calculations are being made. It is also much easier to be transparent about the factors that go into calculating premiums when there is no human hand involved.

Automation has already made a huge difference in this regard, and it will only get better. With a more comprehensive system for calculating risk than ever before, premiums will become extremely fair, while remaining lucrative for insurance companies.

Testing New Products

A huge way in which automation is changing the insurance industry is in the ability to test new products that have been innovated by knowledge workers who no longer need to deal with the administrative details. Instead of having to roll out products to customers in order to get a full understanding of whether they are worthwhile, automation allows people to test a new product on a massive scale, taking a massive range of possibilities into account.

This helps insurance companies come up with better ways of serving their customers while increasing their own profits.

As AI improves and becomes better able to understand how humans work and what humans need, we will be able to use it to create products that humans would not have thought of. Automation is already changing the insurance industry for the better, and that will continue happening on a major scale.