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How artificial intelligence is reshaping the insurance industry

Advanced AI algorithms and machine learning have the power to revolutionize almost any industry, and the insurance industry is no exception. Historically, the insurance industry has been driven by mathematics; underwriters were responsible for calculating risk and coming up with rates that could reliably ensure reasonable payouts without bankrupting the company offering them.

Today, mathematical, logical, or repeatable operations are best handled by AI, but how is the insurance industry taking advantage of this fact, and how will the industry change in the future?

The current state

First, let’s take a brief look at the current state of the insurance industry, as it relates to AI:

  • Risk assessment and big data. Most major insurance companies are using more powerful AI and data analytics algorithms to calculate risk more accurately. They need to be able to pull in vast quantities of data to better understand consumer risk.
  • Usage-based policies. Modern insurance policies sometimes rely on usage-based calculations, varying your rate based on how often you engage in a specific activity (like driving). With higher-tech sensors and ubiquitous connected devices, it’s easier for companies to gauge your activity levels.
  • Virtual claims and settlements. You may also already have access to virtual portals where you can interact with chatbots to get your customer service questions answered, or file a claim online.

So how could these trends develop or change in the future?

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