Sunday, April 21, 2024

AI could save $17B for global insurance industry by 2027: report

A new report from professional IT services company Accenture shows that inefficient underwriting processes and poor claims experiences could cost the global insurance industry as much as $170 billion in lost premiums – a problem that artificial intelligence (AI), machine learning, and data analytics might be able to address.

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Accenture’s “Why AI in Insurance Claims and Underwriting?” report surveyed over 6,700 policyholders in 25 countries; over 120 claims executives in 12 countries; and over 900 underwriters in the US. The study looked at upcoming challenges to the international insurance industry, and how emerging computing technologies could affect the playing field.

Slow, difficult settlements

The research showed that 31% of claimants were unhappy with how their home and car insurance claims were handled in the last two years. Six out of ten of these 31% had problems with the speed of settlement, and 45% had problems with the way the deal was closed.

A big reason why clients decide to switch underwriters is because they are unhappy with the way claims are handled. Almost one-third (30%) of unhappy claimants said they had switched insurance companies in the past two years, and a further 47% said they were thinking about doing so.

The report said that the unhappy customers could add up to $34 billion in premiums every year, or up to $170 billion over the next five years.

But the paper says that AI technology might be able to speed up the claims process and stop this possible loss of revenue. Four out of five (79%) claims executives surveyed believe that automation, AI, and data analytics based on machine learning can add value to the whole claims value chain, “from identifying fraudulent claims to damage assessment and loss estimation, reserving, adjusting, processing optimization, and subrogation.”

Eagerness to adopt AI

So far, however, only about one-third (35%) of claims executives say that their companies are advanced in how they use these technologies. The respondent executives also said that over two-thirds (65%) of insurance companies want to invest $10 million or more in these technologies over the next three years, with a focus on AI-based applications and automation technology.

The Accenture survey also showed that by 2027, insurers could save up to $160 billion by using AI technology to cut operational costs related to underwriting. It was found that up to 40% of an underwriter’s time is spent on non-core and administrative tasks, resulting in anywhere from $17 billion to $32 billion in efficiency losses every year.

Also, more than half (60%) of the underwriters who were asked thought that their business’s tools and procedures could be better.

Empowerment through AI

“AI is no longer a technology of the future, but an established capability that many insurance innovators are already putting to work to deliver better customer experiences and empower their workforce,” said Accenture senior managing director Kenneth Saldanha, global lead for the company’s insurance practice.

“As humans and AI collaborate ever more closely in insurance, companies will be able to reshape how they operate, becoming more efficient, fluid and adaptive. Those that are already moving to leverage AI will be able to create sustained competitive advantage.”

The full Accenture report can be found here.

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