The profound impact of AI on insurance, Part 2

Last week, we learned about some of the profound impacts artificial intelligence is already having on the insurance industry. By integrating AI software and data, we are transforming how risk assessment is conducted, allowing us to better evaluate a client's risk profile. This benefits both the insurer and the insured.

But what about the impact of AI on personal insurance? We've already detailed in the past how artificial intelligence could impact businesses, but what about the policies that almost all of us have? Car insurance? And home insurance?

Artificial intelligence has the potential to dramatically change how we interact with the world. Here's how it could impact your personal insurance.

AI and car insurance

Frustrated by ever-increasing rates? Numerous external factors have recently impacted car insurance rates, not only in Quebec, but across Canada. AI may be the game-changer when it comes to car insurance. Indeed, as innovation reaches new heights and autonomous vehicles begin to take to the roads, we will see a whole new way of calculating insurance risk for automobiles.

Get moving, electric vehicles. In the coming decades (or even sooner), autonomous vehicles will arrive. These vehicles are designed to be fully or partially autonomous, and they use technology to essentially follow entered coordinates to reach a destination while monitoring the road around them for speed limits, proximity alerts, obstacles, and more—all to keep you safe so you can arrive in no time. These autonomous vehicles are destined to solve many problems in the world of driving, from bad driving habits causing accidents, vehicle write-offs, serious injuries, or even deaths, to helping us reach our goals on time.

We can attribute high insurance premiums to the number of claims filed. The more claims there are, the more insurers will have to charge to add to their cash reserves. But with autonomous vehicles, the only risk is manufacturer error. We thus completely eliminate human error.

Ideally, there would be fewer accidents, fewer collisions, and as we embrace artificial intelligence and data, the customer experience will be smoother. At that point, car insurance might be less focused on other drivers and more on claims against manufacturers for errors and negligence.

AI and customer experience for car insurance

With AI, the way we interact with our service providers has changed. When was the last time you called a service provider and spoke directly to a human employee? Probably a long time ago, right? That's because many companies have embraced the idea of offloading basic tasks to AI to free up employees for more complex ones.

Imagine you've been in an accident. You'd have to call your insurer to file a claim, right? What if, the moment you get out of your car to assess the damage, your car had automatically measured the damage, the location of the accident, and estimated the overall repair cost, and submitted that information to your insurer? Wouldn't that be easy?

This could be possible with AI in the future. In the insurance industry, there's already a huge problem with the time it takes to settle a claim, due to all the intermediaries. What if we eliminated these intermediaries and got straight to the point? Artificial intelligence has the potential to do just that.

AI and home insurance

Have you heard of a "smart home"? You've certainly heard of a smartphone, but take a look at this: many people are making their homes futuristic by using technology that allows their homes to use automated systems to perform basic household tasks. Smart homes can monitor temperature, security systems, and much more.

How does this change home insurance? Well, homes equipped with smart features may be rewarded by insurance companies with discounts for incorporating the systems they use to keep your home secure. Homes equipped with smart monitoring systems are less likely to catch fire, and break-in attempts can be prevented.

That's not all. With artificial intelligence technology, insurance companies can begin using postal codes and GPS location to accurately assess the risk associated with a person's property. Your location is a key factor in the premiums you'll pay, but if the area where you live has a high number of claims, you'll likely pay more for your insurance.

With a new process called geolocation accuracy, insurers can see where policies are located down to the building or lot level and obtain more precise information about their proximity to various types of risks. This means policies are more accurately assessed. You won't have to pay for your neighbor's high claims rate.

In conclusion –

As you can see, AI implementations will change the way we think about insurance. Software can increase the productivity of insurance processes (such as claims and underwriting) and significantly reduce operating expenses for insurers. Furthermore, artificial intelligence has the potential to improve customer experience, productivity, and business resilience as it transforms and learns to analyze increasingly complex data with each advancement. Change isn't always a bad thing—perhaps it's time to start embracing the future of business, insurance, and most other aspects of our lives.