How AI Can Transform Insureds’ Lives in 2023

By Robert Clark | January 23, 2023

Artificial intelligence (AI) has been a popular topic of year-end prediction articles in recent years. Looking ahead in 2023, I offer a viewpoint that goes beyond the marketing buzz with my forecasts of the value insurers could realize from AI and the potential impacts these AI implementations will have on their customers.

Trusting AI

This time last year, I made the case for insurers to begin taking their insurance data more seriously. Now it is time to address the next challenge — the ability to trust AI. While the promise of AI is alluring, if it does not provide accurate, unbiased and micro-personalized innovations with impeccable levels of data transparency and security, AI is not ready for prime time.

After effectively consolidating large streams of data securely and accurately, I expect insurers will feel more confident in the integrity of their models — models that will serve as the basis for the intelligent products and services they will offer insureds.

While insurers have not figured out in a concrete way what insurance AI products and services to offer, there are industry trailblazers that I believe will lead the way beyond telematics to really personalize the value insurance can deliver to customers.

This likely will begin with auto insurance, as most work done by insurtechs and large insurers with machine learning (ML) has been around understanding data to prevent risks. I think insurers will start offering daily, if not more frequent, recommendations for drivers on how to be safer and improve their insurance rates. With continued economic pressure and instability, saving money on car accidents, fuel and insurance rates will likely be more important in 2023.

Beyond Buzzwords

While buzzwords make for good headlines and marketing, the insured does not care about a carrier’s digital transformation if it does not impact their pocketbooks or quality of life.

As we are witnessing across many industries, reducing expenditures is a major priority, which is resulting in slashing budgets, hiring freezes and layoffs. These pressures will make insurers wake up and look for technology partners and internal employee talent that can translate AI into meaningful value for the insured.

Natural Disasters

As large insurers refine their ability to increase or decrease insurance coverage during a disaster through the analysis of customer data models, there is an opportunity to do more. And insureds can be more active partners in protecting themselves and others.

The most immediate area is by leveraging more sensors and applications that can track a person’s activities along with their cars, homes and other assets in real time to make parametric insurance rates and coverage personalized to the individual and not on a macro level. If insureds and carriers can do this together, it would be a HUGE achievement. Individuals could be better prepared for a disaster, with intelligent recommendations about their lives and assets to reduce the likelihood of accidents or claims as much as possible since the exact impact of a disaster is never certain.

Customer Experiences

As consumers purchase more sensor-based technologies and increase permissions to monitor more data, this will create opportunities for new technology partnerships between P/C insurers and vendors in healthcare, tourism, entertainment and other areas to ensure positive, safe customer experiences.

For example, an individual with diabetes can have data from implantable glucose monitors synced with their auto insurer’s telematics system, which can trigger an alert to the fact their blood glucose levels are concerning. As part of the alert process, the insurer could advise the individual to perform safe driving tactics such as pulling over to take the required medicine or finding a store with the food they need to protect their health.

There are likely many other areas where insurance and AI can deliver value, but we must master the foundational things like trust, security, transparency and accuracy first. From there we can build on real-world, valuable offerings inside and outside the industry to transform lives.

Topics InsurTech Data Driven

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Insurance Journal West January 23, 2023
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