The UK branch of major multinational insurer Ageas announced on Thursday that it is adopting AI technology to help with motor claims handling. The AI tool, “AI Approval,” has been developed by fintech Tractable, and integrates with the insurer’s systems to automate and speed up the claims management process.
AI Approval uses algorithms to analyze images of cars that have been involved in accidents and require payouts to cover repair costs, and decides within seconds whether a claim is valid — such analysis is typically a manual process carried out by the insurer’s engineers. The AI is also trained to detect and create alerts for potentially fraudulent claims. Ageas has been piloting the AI since the end of 2016, and confirms the test has so far been successful, with its engineers able to validate the AI’s judgments. The company said it is now preparing to take the technology live.
Even if the AI’s algorithms seem to be on track, consumers could still balk at the removal of human judgment. Although AI Approval’s accuracy seems proven, Ageas may find that if it does on occasion make decisions that don’t make sense, it will be difficult to justify deferring to the AI’s judgment to clients. AI is still a nascent technology, and customers may take issue with a machine’s assessment of whether they merit a payout taking precedence over humans’ common sense. Therefore, Ageas would do well to continue close supervision of the AI and allow humans to intervene where necessary.
The global insurance industry is worth nearly $5 trillion, and insurance companies are at risk of losing a share of this valuable market to new entrants. That’s because these legacy players have been even slower to modernize than their counterparts in other financial services industries.
This has created an opportunity for a group of firms known as insurtechs. These startups are leveraging new technology and a better understanding of consumer expectations to increase efficiencies in the insurance industry. Some are helping incumbents deliver better end products, while others are directly competing with legacy players.
Sarah Kocianski, senior research analyst for BI Intelligence, Business Insider’s premium research service, has compiled a detailed report on insurtechs that looks at the drivers behind the increasing number of insurtech companies, how they are helping or disrupting legacy players in the insurance industry, and where legacy players are innovating off their own backs.
Here are some of the key takeaways from the report:
- The opportunity is currently biggest in the US and Europe. That’s because these regions have large, very mature insurance industries.
- Insurtechs’ products and services mostly target retail customers. This includes small businesses and consumers.
- Most insurtechs are acting as enablers. This means that they offer products and services that help insurers and reinsurers improve their processes and better serve customers.
- Of the main players in the insurance industry, brokers are most at risk of disruption. This is because insurtechs can easily replicate their services and are solving historical industry problems faster than legacy players.
- Legacy players are also innovating. In particular, insurers and reinsurers are investing in insurtechs and fintechs working with relevant technologies. At the same time, they are improving their own direct-to-consumer digital interfaces, increasing their disruptive threat to brokers.
In full, the report:
- Explains the structure and current state of the insurance market.
- Highlights areas where insurtechs can help legacy players modernize.
- Describes where insurtechs are competing with incumbents and how their models compare.
- Provides case studies of insurtechs.
- Outlines the legacy response.
- And much more.
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