5 ways AI is changing short-term insurance

Artificial intelligence (AI), once relegated to the realm of science fiction, is fast becoming part of our everyday lives. It's increasingly being used in business to improve efficiencies, with the short-term insurance sector being among those industries adopting AI-driven processes.

In essence, insurers are using AI to enhance important procedures like underwriting, and practices like detecting fraud, to make short-term insurance more efficient for both firms and their clients.

Here are 5 ways AI is already being used in short-term insurance:

Faster claims processing

AI has the ability to evaluate all types of data, including visual data (i.e. videos and images). During the claims process, AI analyses the data received from clients and processes this, reducing lengthy claim forms and phone calls, and speeding up the approval process. A good example of this is where claimants submit photos of their vehicle after a bumper bashing, and AI analyses the photos, determines authenticity, and estimates repair costs, processing the claim in a fraction of the time.

Fraud detection

Fraudsters are constantly looking for new ways to take advantage of insurance payouts, including using AI to generate fake vehicle and household damages photos for fraudulent claims. Ironically, insurers are using AI to spot these images, as well as patterns and anomalies common to false claims, to weed out illegal activities. This helps keeps premiums lower for honest customers.

Personalised pricing

Driving and lifestyle apps have become popular in recent years as these tools help insurers accurately assess customers' risk. In driving apps, for example, AI algorithms analyse driving data such as driver behaviour, harsh breaking, speed limit compliance etc. for individual drivers. This enables insurers to personalise pricing based on actual customers' behaviour as opposed to one-size-fits-all generic data.

Chatbots and digital assistance

In our always-on society, customer demand for insurance claims, queries and quotes doesn't keep business hours. To increase flexibility for customers, and ensure insurers never miss an opportunity to connect with potential clients, firms use chatbots to engage with online users. AI-driven digital assistants can also be programmed or given permission to automatically resolve certain customer-related tasks and even approve policies. This is not only improving insurers' efficiencies, but enhancing the insurance customer experience as well.

Predictive risk management

The patterns of various risks to insurance customers, such as severe weather, heavy traffic and even crime, can be monitored by AI and used to predict hot spots, current trends and future events. This information enables insurers and clients to be better prepared for possible risks, and for firms to adjust policies accordingly to ensure accurate coverage.

The use of AI in these ways is delivering significant benefits to short-term customers.

These include improved service delivery (less admin means faster payouts); lower premiums, as pricing is fair and based on real behaviour; better customer support, thanks to 24/7 assistance via chatbots and apps; fewer disputes as a result of smarter assessments; and tailored cover, with policies that are relevant to customers' specific lifestyles.