The insurance sector is known for its use of data in calculating risks, premiums and product development. How has AI impacted data science and growth in this industry, especially in Asia?
The benefits of AI are being recognized by the insurance industry, with the use of AI in claims processing expected to replace more than half of current claims activities globally by 2030.
However, AI and data analytics can be used in many ways to facilitate insurance growth. The emergence of Gen Z as a major customer segment, and the rise in demand for personalized insurance products and customer experience, have made AI and data analytics crucial to the sector.
Regional insurtech Igloo believes that data and AI in insurance offer opportunities for customized coverage and deeper insights. Igloo uses data from partners and its data centers to analyze patterns and trends and conceptualize new products that cater to today’s emerging lifestyles.
DigiconAsia finds out more from Liliang Zhu, CTO, Igloo.
What is AI-driven analytics doing for the insurance industry?
Liliang Zhu: According to Forbes, AI has led to a 60% increase in operational efficiency and nearly doubled claims accuracy, greatly improving customer experiences. AI-driven analytics is revolutionizing the insurance industry by enhancing efficiency, personalization, and operational accuracy.
Insurers can leverage AI to streamline claims processing, improve risk assessment, and detect fraud, significantly reducing operational costs and time. AI enables the analyses of vast datasets to identify customer behavior patterns, enabling the development of highly personalized insurance products.
At Igloo, we utilize AI in two primary areas: the consumer side and internal operations.
Consumer side
A range of AI-powered solutions is available for insurers to streamline processes such as underwriting and claims. These embedded AI systems enable the efficient handling of large volumes of business transactions.
Internal operations
Zhu: Leveraging vast data to train AI models, insurers can enhance pricing and risk management. This data-driven approach allows Igloo to make more informed decisions and optimize its operations.
By harnessing the power of AI, Igloo is able to provide a seamless and efficient experience for its customers while also optimizing its internal processes.
With LLM, we started to upgrade some of the AI solutions we did before. The recent case is the chatbot. By adding new features such as policy document analysis, script generation and so on, we improved the chatbot to another level.
How does it help in terms of deeper insights into customer behavior and preferences across diverse Asia Pacific markets, especially in enabling insurers to address regional needs with precision?
Zhu: AI-driven analytics can help insurers gain comprehensive insights into customer behavior and preferences across diverse Southeast Asian markets. By leveraging big data, machine learning, and AI, they can tailor their products to meet specific needs in these individual markets which are quite nuanced. In regions with varying degrees of risk exposure like Southeast Asia, AI can help insurers optimize pricing and underwriting processes to reflect regional risks adequately.
AI-powered tools like dynamic pricing models and recommendation engines have allowed us to gain a deeper understanding of customer behavior and preferences in order to offer the right insurance solutions that are relevant and valuable to them at a price that is fair and based on real-time risks. Meanwhile, recommendation engines have helped in suggesting the most suitable products to customers by predicting their behavior based on historical data and interactions, enhancing their overall experience. With more and more data generated, we now can provide a more accurate pricing rate and recommendation.
In essence, AI can aid insurers in the Asia Pacific region in understanding and responding to their customers’ varying needs with greater precision and agility. By leveraging AI insurers can enhance customer satisfaction, improve operational efficiency, and drive business growth.
What would be a strong case for data sharing between insurtech and insurers?
Zhu: At Igloo, we work closely with our insurer partners to crunch demand data and identify trends and emerging risks. This is essential for two reasons:
First, Southeast Asia is a market with diverse preferences and customer behaviors. This changes our approach to every single market within the region, and this has served us well since the beginning. An understanding of the individual landscapes requires a deep understanding, and along with our partners, we have the right setup to gain that.
The second reason is to conceptualize new products. Today’s consumer’s lifestyle is ever-changing. There are new behaviors seen every day. With our hyper-personalized microinsurance offerings, we are always looking to protect consumers in their daily lives – be it dining out or gaming.
Our partnerships allow us to analyze and observe these risks that consumers face on a daily basis, and together we work to conceptualize new products that allow us to provide financial freedom.
In your opinion, what is the future potential of data analytics in the insurance sector?
Zhu: The future potential of data analytics in the insurance sector is vast.
We’re seeing advanced technologies like smart devices and telematics revolutionizing data analytics, proving to be a game changer for the industry because insurers now have unprecedented access to data and insights. This access coincides with a growing willingness among consumers to share personal data across industries.
As insurers gain more access to data than ever before, AI-driven analytics will play a significant role in transforming every aspect of the industry, from enhancing customer experiences to actively monitoring for fraud.
With the speed at which the industry is moving towards personalization, real-time risk assessment and dynamic policies will be critical functions enabled by AI’s data-crunching capabilities. This will lead to on-demand insurance products that adapt to changing customer needs. We expect this to be the biggest benefit of AI.
Big data and predictive analytics will help insurers identify emerging risks and opportunities, driving continuous innovation. At Igloo, we are bullish on the impact of AI, with the potential to reap benefits in multiple key elements of insurance businesses. Consequently, data analytics will transform the insurance industry into a more agile, customer-centric sector, enhancing both service quality and operational efficiency.
