Data suggests P&C insurance is at an AI tipping point
Insurance customers now expect digital technologies to be universally available.
The P&C insurance economy has experienced a seismic shift over the past 12 months. While photos and AI were used pre-pandemic just over a year ago, the industry was heavily reliant on in-person interactions and touchpoints — staff reporting to call centers to deliver customer support, appraisers appearing in-person to inspect vehicles and generate estimates, and auto shops checking-in vehicles in need of repair.
Things changed in an instant.
Managing claims during a pandemic
As the pandemic took hold, insurers moved to accelerate the adoption of digital tools and AI to support the claims management process while keeping employees safe and socially distant. During 2020, claims processed through CCC deep-learning AI increased more than 50% year over year. CCC, which is a P&C insurance technology provider that works with many of the top auto insurers in the U.S., processed more than five million unique claims using AI on behalf of carriers, all while total claims decreased over the same time period. Tools such as photo estimating, virtual inspections, heat maps and online shop scheduling provided insurers with a digital pathway to contactless claims — an experience aimed at allowing customers to move forward with their lives when it when mattered most.
As states reopen and vaccinations continue to be introduced, I’ve been asked by both customers and colleagues whether the industry will revert back to more in-person experiences. My short answer is: No.
The longer answer is that the use of remote technologies was foretold months ago. Today, as new, streamlined experiences have been revealed, people like it, and insurers of all sizes are seeing value, both to the bottom line and in customer satisfaction metrics.
The benefits of AI for insurers and policyholders
The rapid adoption of digital tools incorporating AI has had a significant impact on auto insurers. When an accident occurs, hundreds of decisions need to be made to properly resolve the claim and restore the vehicle to pre-accident condition. Deciding whether the vehicle is repairable or should be declared a total loss sets a policyholder down two vastly different paths. Knowing which path it will likely be early on can help improve the policyholder experience, speed cycle time, and help manage claim costs.
If a vehicle is repairable, AI can help predict which parts are needed, the labor involved in the repair, and even help an appraiser generate an initial estimate more quickly. But this isn’t easy. To make an accurate recommendation, the AI model needs access to relevant data — lots of it — to correctly identify problems and determine whether a part should be repaired or replaced. If replacement is the answer, deep-learning AI can identify with specificity which parts need to be addressed. This is where AI in claims processing shows real value. Sophisticated AI, built on vast, relevant data sets, can make these line-level predictions — predictions that can ignite real decisions that drive speed and consistency.
And it’s not just the insurers benefitting. Policyholders are deriving real value from the growing use of technology. Increased personalization, more transparency in claim status, and speed in the claims process are leading to increased customer satisfaction. Recent research on consumer attitudes toward digital claims found that digital claim filing is associated with a more positive overall customer experience and accelerated claim resolution. The same research found that 80% of policyholders that have initiated a claim using photos found it appealing and easy to navigate the process using mobile apps. The majority of respondents said they would file claims digitally again if another claim was necessary.
Customer satisfaction with these new capabilities has created a tipping point for the use of photo and mobile technology in insurance. These technologies pave the way for P&C insurers to continue to adopt and expand their digital offerings across the entire insurance journey, including underwriting, claims, administrative support and customer engagement.
AI is contributing to faster and more consistent decisions across the claim lifecycle. While efforts were already underway to adopt AI, insurers and their customers adapted quickly during the pandemic, finding they liked the added flexibility, streamlined operations, and expanded capabilities. This has created customer expectations that technology will be universally available, and AI will be embedded in their daily interactions, including with their insurance provider. It is now up to P&C insurers to continue to meet these expectations.
John Goodson (jgoodson@cccis.com) serves as a senior vice president of Product Development and Technology for CCC Information Services.
See also: