How Automated Insurance Underwriting Can Save Small Businesses Money

Insurance is an established and heavily regulated industry. Because of this, insurers have been slower to accept technological development (such as automated insurance underwriting) compared to other sectors. As a result, insurance is still immersed in manual and slow document processes that need a lot of human interaction. 

Even today, clients are faced with time-wasting paperwork and bureaucracy, whether getting a claim refunded or registering for a new insurance policy. Clients may also spend more on insurance if policies are not personalized for their individual needs. 

Learn How Automated Insurance Underwriting Can Help Small Businesses Save Money

Insurance companies are setting a global drive to expand their technological capacity to do business faster, more securely, and more cost-effectively. In the past couple of years, there have been some notable examples of insurance companies investing significantly in AI-powered solutions. 

McKinsey forecasts a potential yearly value of approximately $1.1 trillion if the insurance businesses apply artificial intelligence tech fully. This rapid change has significant implications for both insurers and applicants. Here's how automation transforms insurance companies and how small businesses can save money by using an underwriting company that employs AI tools.

Fraud Detection

Insurance companies are concerned about fraud, and automated insurance underwriting is an essential component in the battle against false claims. It's all about identifying patterns that might escape human cognition.

Machine learning algorithms offer details on suspicious claims, including repair costs, potential liability estimates, and procedures for resolving and improving fraud protection. Its capacity to assist in detecting suspected fraud is widely established compared to human-led data science, which has proven to be just as capable. With artificial intelligence, fraud activities are low, leading to fewer losses. Your company gets to spend less on expensive human labor and servicing frauds, making overall costs and clients' charges low.

Lowering Human Error

The industry's distribution chain is winding and complicated. A series of financial intermediaries examine data between the insurer and the insured, resulting in lots of opportunities for errors and physical work that slows down the process. However, automated insurance underwriting is addressing this issue.

As data passes from one source to the next, algorithms minimize the time and amount of costly errors present. The insurance company minimizes entering and reentering data and improves accuracy. People might feel tired and make mistakes, but algorithms don't. When insurance services are efficient and require no intermediaries, it becomes cheap for the consumer and more profitable for the insurer.

Determining the Level of Risk

Historically, underwriting has assessed clients' insurance risks based on information provided by applicants. The problem is that applicants may be insincere or even make mistakes, causing these risk assessments to be inaccurate and costly. Automated insurance underwriting allows insurers to sift through much more abstract data sources, such as social media posts and SEC filings, and compile relevant data to assess the insurance carrier's risk better.

Premiums will be more appropriately priced when risk assessments are more accurate. A more personalized exposure model can make a big difference in a sector where the major difference between insurers is their prices. Once an insurer can appropriately determine the level of a client's risk, they can offer a more personalized service.

Customer Service

Even in a change-resistant industry like insurance, excellent customer service is critical. After all, people avoid companies that provide poor customer service. That's why chatbots have become so popular on insurance company websites. These AI tools can assist customers with a variety of questions with no human intervention. You only need to invest in a chatbot once rather than pay several customer service attendants every month. Unlike many real-life teams, they're also available 24 hours a day, seven days a week.

For example, a client who needs help accessing their account on the insurer's website can dial up the chatbot for help. This function has the potential to resolve the customer's crisis quickly and avoid or lower any potential losses. Real human support agents can still be necessary for more complex issues, but AI chatbots can handle most of the rest.

Claims Processing

Insurers process claims and assist customers with coverage, but assessing claims is difficult. To evaluate how much the client receives for their claim, agencies must analyze several policies and go over every detail. This can be time-consuming and expensive, but AI can assist.

Machine learning will quickly figure out what's associated with the claim and estimate the potential costs. They can look at images, sensors, and the insurer's previous data. The results of the AI can then be verified by an insurer, who can then settle the claim.

By digitizing your existing company, you can help your small businesses save money along the value chain and enhance client lifetime value. Companies can reduce the costs of a claim process by up to 30% with automation.

How AI Is Beneficial to Consumers

Extensive industry adoption of technology shows the benefits it provides to enterprises in the industry, sometimes with no apparent impact on consumers. But that is not the case with AI in the insurance industry, which has demonstrable client benefits.

Insurers can use AI-assisted risk assessment to better design policies so that customers only pay for what they need. It can also reduce expensive errors in the entire process, ensuring that customers get plans that are tailored to their specific needs. AI can broaden insurance underwriting for small businesses, increase the alternatives, and speed up the claims clearance process. Customers receive what they require and pay less for the services they need because of this process.

Getting Started With Automated Insurance Underwriting Services

As an insurer, there are many advantages to adopting an automated underwriting system. When compared to manual underwriting, an automated procedure is not just faster. It also improves customer satisfaction and lowers costly errors, saving your business money. Salaries are some of the most expensive expenses in most companies. Adopting AI will help you reduce the human labor required in your insurance firm and save on the costly monthly salaries of employees.

To enjoy all these benefits, you'll need to work with a top insurance analytics company such as Pilotbird. Pilotbird is a system that integrates and analyzes social data points to provide actionable lifestyle insights, recognizes context to develop lifestyle profiles, and generates personal insights. It improves the accuracy and relevance of underwriting, distribution, client engagement, and fraud detection. With a product portfolio powered by context-aware AI, Pilotbird helps its clients optimize their top and bottom lines with ease. Contact Pilotbird today for more information.

Sources

1. AI in Underwriting: Data-driven Insurance Operations in 2022 
2. Digital disruption in insurance: Cutting through the noise
3. How Are Insurance Companies Implementing Artificial Intelligence (AI)?