India is one of the world’s fastest-growing insurance markets, with projections indicating it will reach $222 billion by 2026. The country’s insurers are increasingly turning to technological advancements to fuel that growth and help drive efficiency, enhance customer satisfaction, and mitigate risks. In particular, Artificial Intelligence (AI) stands out as a game-changer, offering the potential to revolutionize traditional practices. Understanding how AI is being used in insurance—from improving customer service to helping detect fraud—can provide valuable insights for organizations seeking to harness its transformative power. In an inherently information-driven industry, insurance companies ingest, analyze, and process massive amounts of data. And accessing, managing and responsibly using this data will be key to unlocking the AI opportunity.
Here are five distinct ways that AI technologies are revolutionizing the insurance industry, including customer service through AI-driven chatbots, virtual assistants, fraud detection, advanced analytics and more. At the end, we’ll also look in more detail at what organisations need to do to enable their AI strategy.
Enhanced Customer Service and Engagement
AI-driven chatbots and virtual assistants have revolutionized customer interactions in the Indian insurance sector. These intelligent systems can handle a wide range of customer queries and tasks, including policy inquiries, claims processing updates, and premium calculations, efficiently and round-the-clock. By leveraging natural language processing (NLP) and machine learning (ML), insurers can provide personalized and responsive customer service, improving overall satisfaction levels and retention rates.
For instance, leading insurance companies in India like TATA AIG and Canara HSBC Life Insurance are using AI. Some of them have deployed AI chatbots on their websites and mobile apps to assist customers with instant responses to queries, thereby reducing response times and enhancing the overall customer experience. Such implementations not only streamline operations but also demonstrate a commitment to adopting cutting-edge technologies to meet evolving customer expectations.
Streamlined Claims Processing and Fraud Detection
AI technologies have also significantly accelerated claims processing and enhanced fraud detection capabilities within the Indian insurance sector. AI algorithms can automate document verification, assess claim validity, and detect anomalies in claims data, enabling faster and more accurate claims settlements. Moreover, AI-powered fraud detection systems analyze patterns and anomalies in real-time data, flagging suspicious activities early to mitigate financial losses and maintain trust with policyholders. In practice, a number of insurance companies in India have already implemented AI-driven claims processing systems to expedite claim settlements and to minimize administrative overheads. These systems not only improve operational efficiency but also uphold fairness and transparency in handling claims, thereby enhancing customer trust and satisfaction.
Underwriting and risk management
Few roles in the insurance industry are as crucial as underwriters, who balance profit and risk, incorporate real-world variables into the insurer’s core actuarial models, and guide product portfolios, markets, pricing, and coverage. Achieving a balance between exposures and premiums requires continuously gathering and analyzing information from numerous sources to create a comprehensive risk profile for effective policy decisions.
Although many established insurers have extensive data from their own underwriting and claims experience, incorporating new and real-time information sources, keeping up with regulatory changes, and modelling hypothetical risk scenarios still demand significant manual effort. Leading insurers are looking forward to integrating AI-driven predictive analytics into their underwriting processes to enhance accuracy and efficiency. These systems will analyze complex data sets swiftly and accurately, allowing insurers to tailor policies more precisely to individual customer profiles. This proactive approach will not only improve risk management but also ensure competitive pricing and profitability in a dynamic market environment.
Advanced analytics
Traditional IT systems struggle to quickly adapt to changing data formats and requirements. As a result, underwriters are often responsible for summarizing data and converting it into useful information and insights. To address this, large language models are now being utilized to expedite the process of managing data sources and summarizing the results, enabling underwriting teams to make faster decisions based on the data.
Predictive analytics
AI in insurance can also be used for predictive analytics to anticipate customer needs and behaviours using historical data, enabling insurers to identify at-risk customers and preempt churn. In agricultural insurance, AI aids in crop assessment and risk mitigation, offering precise crop insurance tailored to farmers. In property insurance, AI-driven predictive maintenance using IoT sensors helps prevent damage and loss. Similarly, AI-powered telematics in commercial fleets enables usage-based insurance by analyzing driving behaviour to improve safety, reduce accidents, and optimize premiums. These applications highlight AI’s transformative impact across various sectors of the insurance industry.
While AI is poised to play a crucial role in the insurance industry, many mainstream insurers struggle to use data effectively. They face challenges in data governance and management, limiting their ability to leverage AI for better decision-making. Legacy systems, data silos, inconsistencies, and increasing data volumes make it difficult to manage and utilize data to support strategies and achieve business outcomes. Additionally, the growing importance of nontraditional data from third-party sources presents further challenges, as companies often find it hard to integrate this information with their existing data stores.
Also Read: Redefining Debt Collection for A Smarter & Digital Future
To tackle these issues, insurers need to rethink the foundations of their data infrastructure. If an organisation is stuck with old ways of working with data because of legacy technology or single-purpose, bolt-on solutions, it will not be successful. Tech leaders should instead look for a modern platform that consolidates complex data from legacy systems, incorporates the different data services needed for a modern application and extends those same data assets to AI-augmented workflows. By eliminating the need for niche databases for these AI-specific workloads, companies can: reduce data infrastructure complexity, streamline developer experience, accelerate go-to-market and reduce operational costs for modern AI applications.
In a nutshell, by adopting the right infrastructure insurers in India can use AI-driven automation and analytics to achieve significant operational efficiencies and cost savings.
Views expressed by Himanshumali- Solutions Architect at MongoDB
Elets The Banking and Finance Post Magazine has carved out a niche for itself in the crowded market with exclusive & unique content. Get in-depth insights on trend-setting innovations & transformation in the BFSI sector. Best offers for Print + Digital issues! Subscribe here➔ www.eletsonline.com/subscription/
