AI in the insurance sector: it helps significantly, but cannot replace humans yet

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Insurance companies face challenges with rising costs and client demands. AI automation can address these issues, enhancing the user experience and reducing negative reviews or client attrition. This article highlights the advantages and limitations of AI in insurance and emphasizes that in many scenarios, a human role remains necessary.

You can settle insurance claims faster

If you’ve ever dealt with an insurance company over a car accident, injury or other insurance claim, then you probably have an idea of how complicated, lengthy, and frustrating the whole process can be. This proves that some procedures are outdated and calling for automation.

Resolving an insurance claim starts with evaluating the documents provided by the client (e.g., accident report, medical report, etc.). However, this is often still done manually. Yet the process can be handled much faster.

For example, thanks to NLP (natural language processing) technology, data can be evaluated and preprocessed – categorized, extracted with the necessary information, or simply pointed out, showing the employee where to focus next. Automation is able to speed up almost every part of the process, from the first step to the final sending of the decision to the client.

AI detects scams and reduces costs

Artificial intelligence can also work with images using computer vision – not only can insurance companies assess the extent of the damage based on the provided photo, saving time and work for the adjuster, but on top of that it also detects if the photo has been altered with fraudulent intent. The employee can then only be concerned with checking and validating the decision.

What’s more, artificial intelligence algorithms can detect suspicious patterns in insurance claims, such as unusually high claims, unreasonable loss amounts or unusually frequent repeat claims from the same client.

AI and automation have the potential to increase the success rate of detecting insurance fraud and thus significantly reduce costs for insurers. The number of institutions using these technologies has therefore been increasing in recent years and this trend is likely to continue to grow.

Tailored insurance – Designed by AI

Data collection and analysis allow insurers to create a more detailed profile of each client. This can go some way towards providing a better understanding of their lifestyle, health, financial situation, and other factors influencing their insurance needs.

Based on this information, insurers can create personalized offers that better suit individual clients (and their particular needs). Specifically, this relates, for example, to determining the optimal premium amount, type of coverage, and other parameters of insurance policies.

Weaknesses and limits of automation

Although automation brings many benefits to the insurance industry, it still faces many limitations and has its shortcomings. What are the main ones?

  • Inability to deal with specific and exceptional situations: AI models are trained on large amounts of data, but can have difficulty understanding and solving more complicated and sporadic problems that require human reasoning.
  • Dependence on data quality: AI models are only as good as the data they are trained on. So if the data is not accurate or complete, it can lead to errors in the models’ outputs.
  • Security needs: Given the sensitivity of data, insurers must try to minimize the risk of information leakage or cyber-attacks.
  • Ethical issues: It is inappropriate to deploy a generic robot for distressing situations such as deaths or in cases of serious consequences. Human empathy is sometimes an important part of client communication, and AI cannot yet replace it.
Even innovations using AI will not completely replace the human factor quite yet. Some situations, such as natural disasters or system failures, may require an individual approach and human judgement.

Vojtech Batek, Business Consultant at Trask

We help holistically

So what does the above imply? Each technology needs to be considered, including its weaknesses or potential pitfalls, in relation to the specific business, which must be understood in depth. This is not always easy, so it pays to ask the experts. Trask will provide not only expert consultation and advice, but also an all-around partnership.

In addition to the necessary technology, we have experience in applying AI or using chatbots, as well as knowledge of the insurance industry. We therefore take a holistic approach to the entire digitalization process and help insurance companies to truly reap the benefits of automation.

Are you thinking about innovation? Contact us – we’d be happy to discuss your ideas and needs (and even happier to meet them).


Vojtech Batek
Business Consultant at Trask

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