Zürich Insurance is leading a new trend which has emerged in the insurance market where artificial intelligence is used to review and decide whether personal injury claims are valid.
This is a massive step for the insurance industry which has been plagued by literally millions of false claims in recent years. The problem is that these false claims take up a significant number of working hours even if they are found to be invalid and no payment made. In the event that the company is forced to pay out on false claims, because there is not enough evidence, this not only takes up working hours but also working capital. So, could artificial intelligence be the way forward for the personal injury market?
How Does It Work?
Quite simply medical reports and information relating to all personal injury claims are reviewed by a machine. The artificial intelligence program will consider the basis of the claim against the medical report and is capable of making a decision within five seconds. Zürich Insurance alone estimates that this has saved the company 40,000 working hours which one would imagine runs into savings in the hundreds of thousands of pounds, if not millions. When you bear in mind that insurance companies work on relatively thin margins, savings of such magnitude simply fall into the bottom line and help with profitability as well as cash flow.
The beauty about artificial intelligence is quite simply the fact that it is able to learn as it goes along so not only is it able to monitor the trends of today but also the trends of tomorrow and next year. We all know that the personal injury claims market has changed dramatically over the last few months and the more popular types of fraudulent claims seem to move from sector to sector. Over the years it has been whiplash claims which have bled the industry dry of millions of pounds while today we see an increase in fraudulent activity in the area of employer liability cover.
Decisions Without Emotion
The majority of us would suggest that insurance companies already lack a degree of emotion when it comes to paying out on claims. The fact is that when a decision is being made by a human being there will be a certain degree of emotion attached to the final outcome. This will obviously vary from person to person but as much as we like to be “cold hard” people when it comes to business it is not that easy. The beauty, if that is the right word, in relation to artificial intelligence is the fact that there is no emotion involved whatsoever. True, it is possible to program artificial intelligence devices with a type of emotion but when used in business this is not required.
Companies such as Zürich Insurance are saving literally hundreds of thousands of pounds and this is something which will be replicated right across the industry in due course. It will be interesting to see whether insurance companies communicate with each other on an “artificial intelligence level” and help each other to spot new trends and fraudulent activity. The fact is that unless the industry works together there will be a number of fraudulent claims which do slip through the net. This would be extremely costly not only to the insurance companies but also to customers in the shape of higher premiums.
Customer Service
There is obviously a degree of trepidation amongst the general public with regards to artificial intelligence in everyday life but the fact is that artificial intelligence has been around for many years. It is true that there have been massive jumps in technology in recent times but the idea of using computers to make decisions is not a new one.
The benefit of artificial intelligence today is the degree to which computers are able to learn from historic events. They will very quickly be able to spot the emergence of new trends, much quicker than humans, and alert insurance companies to areas of concern. It is also worth noting that cutting the time it takes to process a personal injury claim from literally hours to just seconds will significantly improve customer service.
Historically one of the main gripes towards insurance companies has been the speed at which they move in relation to bona fides claims let alone fraudulent claims. If, as insurance companies are suggesting, artificial intelligence plays a greater role going forward then this will literally be a game changer for the industry.
Will Insurance Then Become A Technology Sector?
Suggestions that the insurance company will simply become a byproduct of the technology sector if artificial intelligence plays a greater role going forward are wide of the mark. The fact is that insurance companies are heavily regulated both in terms of how they operate and how they are funded. It is highly unlikely that any technology-based company would decide to go through the regulatory process and the hurdles which this presents.
We may well see a number of insurance companies announcing joint ventures in the weeks, months and years ahead using artificial intelligence services created by third parties. However, the idea that insurance market experience and expertise gathered over the years by the likes of Zürich Insurance and Aviva will become worthless is just simply wrong.
Regulatory Issues
It will be interesting to see how the regulators react to the increasing use of artificial intelligence when considering personal injury claims. The fact that artificial intelligence machines learn from past information would suggest that this information is retained in some shape or form by the artificial intelligence system. It is imperative that private information is held safely and securely, as it should be today, but whether the regulators need to bring in a new structure remains to be seen.
Technology and artificial intelligence in particular are moving at lightning quick pace and impacting many areas of everyday life. Who would have thought that artificial intelligence systems would be able to review the details of a personal injury claim, compare and contrast medical reports and make a decision within seconds? The fact is that the systems required to do this are available today and each claim which they review increases their knowledge and their databank.
Conclusion
The fact that Zürich Insurance has saved around 40,000 working hours by using artificial intelligence systems to review personal injury claims will astound many people. If we take an hourly rate of £20 per hour this equates to £800,000 in staffing costs not to mention associated business costs. These savings will simply fall into the bottom line for insurance companies improving both cash flow and their profitability. However, might we see some of the savings used to reduce insurance premiums? Will the authorities push insurance companies to pass on some of these savings? We can live in hope……………
