The adoption of AI in the insurance industry was found to be lagging, according to a recent study conducted by Cognizant. This is despite the fact that many insurance companies are already investing heavily and applying AI in many insurance industry activities.
AI in insurance is fast becoming a useful tool for many insurance tasks ranging from product development to underwriting and claims, to customer service chatbots and risk assessment and quotations. So, if AI in insurance is spreading, why is its adoption rate low?
Uncertainty is one problem
Cognizant’s AI survey revealed that only 51% of insurance execs think AI tech is generally important to their business’ success today, with only 17% saying AI tech is “extremely important”. Meanwhile, when asked whether they find AI “extremely important” to their business success 3 years from now, that percentage more than doubled to 36%. These numbers may appear encouraging, but their overall sentiment is way lower than those surveyed from respondents in other industries like finance, manufacturing and healthcare. The study further revealed that many insurance companies are “unsure what investments to make in an environment where technology evolves rapidly.” This uncertainty is also evident in how the sample population of 50 insurance executives adopt specific AI tech in their projects. All 50 respondents shared a roughly consistent low percentage of adoption; only 44% used computer vision, 44% used analysis of natural language, 41% used virtual agents, 35% used machine learning and 35% used smart robotics or autonomous vehicles. The results suggest that insurers have yet to reach a reasonable level of understanding of how AI tech can give the greatest benefits to their businesses.
Other Barriers to AI
Cognizant’s study also revealed other reasons why insurance execs hesitate to adopt AI for their businesses. Their biggest concern was having “access to accurate/timely data” with a score of 54%, and the second was “retraining employees whose job responsibilities have been changed or eliminated by AI” at 48%. Both these top concerns indicate a lack of awareness of the capabilities and functions of AI. Having access to accurate and timely data with AI is entirely possible, as there are already examples of AI delivering this need to insurers. A concrete example of this is how MetLife now uses the Amelia chatbot. With Amelia’s machine learning and natural language processing features, MetLife’s customer service associates can make decisions from real-time conversations. As for AI “replacing” human beings, this is simply not true. In reality, AI tech is actually assisting human workers do their jobs more efficiently and providing them with accurate data faster across industries, including insurance. With the help of AI, insurers can automatically audit thousands of open claims and still act on them, instead of reviewing a few sample claims and auditing them after they’ve been closed.
The Changing Landscape
For many years, the insurance industry was dominated by companies that have deep pockets and decades of market experience. That could instantly change with the help of AI, which brings the accompanying rise of “insurtech” companies. These companies are those that use tech like AI to maximize savings and efficiency from current insurance industry models, resulting in new, non-traditional rivals to current insurers. The list of insurtech competitors may even include tech giants like Google and Amazon, who are in the planning stages of taking a slice of the insurance pie. For now, the main barrier for companies like them to get into insurance is their own hesitation to enter such a heavily-regulated industry.
Implications for Marketers and Insurance Companies
As with other “problematic” industries that are slow to adopt beneficial AI tech, the main issue of AI in the insurance industry is a lack of awareness. This causes some insurers to hesitate adopting AI for fear of wasting money. AI remains a disruptive force across many industries, and insurance is no exception; to remain competitive, insurers must realize that AI should be integrated into their business strategy now and harness it appropriately. For AI marketers, this is a huge opportunity to offer the most beneficial AI tech to insurers. Insurance executives must move quickly to integrate AI or lose to other insurers that have succeeded in harnessing AI, and AI-driven insurtech companies.
For the full details, read Cognizant’s survey and recommendations here: https://www.cognizant.com/whitepapers/the-insurance-ai-imperative-codex4307.pdf
What do you think about AI tech in the insurance industry? Is the adoption of AI by insurance execs moving at the right pace or does it need to get into full throttle? AI marketers, what opportunities do you see for the insurance industry?
Let us know your thoughts in the comments!