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AI Assistance in Risk Assessment Could Majorly Cut Operating Costs

AI Assistance in Risk Assessment Could Majorly Cut Operating Costs

Businesses are constantly striving for ways to cut costs while also keeping customer satisfaction high. This can be a tricky balancing act. Some companies are consolidating job responsibilities or investing in new technology to help with this issue. One technology that seems to show promise for many areas of commerce is artificial intelligence (AI). AI is being employed by many different types of businesses, including health care providers, manufacturers and even insurance companies.

The Greek insurance company, INTERAMERICAN, is using new automated risk detection AI to identify high-risk prospective policyholders and to prevent fraud. The system essentially takes information about the vehicle to be insured and the policyholder and performs an assessment of the application for coverage. By performing this pre-screening, the company can be more cost effective by detecting fraud early on and understanding which policyholders will likely have higher than average damage claims. This system will help keep premiums lower for existing policyholders because new policyholders that the AI flags as likely having higher than average damage claims will have extra eligibility conditions or be charged a higher premium.

Now, even though the AI crunches the data to flag potential policymakers, the final decision for determining coverage is still made by a human acceptor. So far, the AI system filters-out about 3.5% of new applicants for further examination which can require extra measures to qualify for acceptance. As with many AI systems, there are some false positives that the system flags; however, those false positives will become less common as the AI is fed more data and continues to learn. INTERAMERICAN wants to roll out this system to review current policyholders when their policies are up for renewal as well.

Traditionally, INTERAMERICAN had their underwriting and claims department separated. However, with the advent of this system, internal cooperation between departments was critical. Information collected from both departments, such as previous claims, fraud attempts or relationships with known fraudsters, was collected and fed to the AI. The analyzation of this data by the system providers a better profile of the prospective policyholder and allows INTERAMERICAN to make better decisions for their customers.

The use of AI will continue to grow, especially as a pre-screening tool for many businesses. AI is becoming cheaper, and is usually more effective and accurate than their human counterparts. There will always be a need for a human to make a decision at some point, but machines and AI can at least help guide them to the decision that will strike that right balance between the wants of the customer and the needs of the business.

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