AI and Machine Learning – The Guidewire connect

There is so much talk going on about AI and Machine learning. They have been pioneering numerous
innovations in every possible field, leading to increased efficiency and heightened security. This is
the optimists’ view while pessimists all around the world have advised doom if humans increasingly
depended on AI. They predict massive job loss, privacy concerns and other unforeseen risks involved
with AI and ML.

To start with, “What exactly do AI and Machine learning mean to us in the business world?”

AI and Machine Learning are two hot technologies in the market right now. Since they are still in
their evolution stage, there is much speculation about what they exactly are. Every business wants a
piece of them for their work-flow resulting in much confusion.

Artificial Intelligence (AI) is all about building smart machines, while Machine Learning (ML) focuses
on building algorithms that will allow the machines to learn from experience.

AI allows a machine to carry out tasks that are not pre-programmed, but they can figure out
themselves. For example, people are trying to build smart cars based on AI. This needs immense
calculations and data analysis to allow the machine to choose the most accurate and best course of
action.

On the other hand, ML feeds man made algorithms to the machine that will allow them to learn and
evolve to recognize patterns and analyse data. The concern here is the possibility of the machine
forming it’s own conclusions and assumptions as true and creating its own path away from the
planned one.

What does all this mean for the Insurance industry?

The insurance industry does not want to be left out of the AI and ML race, when the world at large is
embracing these technologies. The industry sees huge potential for these technologies in
transforming the entire insurance business landscape around the world. Particularly in the P&C
sector, AI is expected to bring a paradigm shift in the way policies are generated. Classic AI is already
in use here. Currently it is being using for simple tasks like data gathering, policy generation and
claim processing. However, the applications of AI have been found out to be far and wide.

Current applications of AI in Insurance

AI has a wide application in any business. A few of their current applications are given below

Data/Text Mining: Information is wealth. Information provides great insight into the customers risk
factors. Information could also pertain to emails & notes from the underwriters, adjusters, insurance
agents and others.

Robotic Process Automation: Reduces processing time through automatic form filling, test case
execution, data capturing, among others

Chatbots: Helps in improving customer experience

There are other technologies like Image recognition & NLP (Natural Language Processing), which
have a high potential to provide some value added services to improve customer satisfaction.

Value Add of AI in Customer Acquisition

Guidewire is the leading provider for the Property & Casualty segment, which is a dynamic business
venue, captivating the arena with its constant technological advancements and innovation. 60% –
70% of the cost is incurred on claims & adjustment processes. The legacy systems are difficult to
maintain and have blotchy integrations with new systems. Guidewire allows integration of AI and
Machine Learning with its current platform, to improve operating cost efficiency and reduce claims
cost.

Insurance companies’ focus is maintaining customer relationship while managing risks. AI can be
used in several fields like Risk Management, Fraud Detection, Customer Acquisition and Customer
Service, Claims Management & Internal Operations.

This white paper focuses on Automated Cross-Selling to Customers. There are numerous algorithms
in place relating to risk management and claims management. Customer Acquisition could be
enhanced with the help of AI too.

Cross-selling or Upselling is the best form of generating new business. 60% - 70% of new business is
gained through cross-selling to existing customers. Customer data can offer us the largest lead
generation. Using the correct AI and ML metrics can help insurance companies in identifying the best
product to cross-sell to a customer.

Existing Customer Database: Data is everything. Existing customer records can offer much insight
into the customer’s needs than any other source. Vast data pertaining to the demography,
preferences, attitude, hobbies, lifestyle, interests, behaviour and social interaction can be used to
offer personalized offers to existing customers. AI can help find out all existing policies for the
customer. Cross-sell for a policy that is about to expire with bundle offers. A new home-owner can
make good with a home-owner policy. This also helps in enhancing customer satisfaction.

Integrating CRM tools with AI for lead generation: CRM tools can be automated to identify best
possible product for cross-sell based on the customer’s personal data. A young growing family will
have different policy needs than a retired couple. A bakery owner might have different policy needs
compared to a furniture store owner. A small family of 3 can be offered a different set of policies
than a family of 5.

Automated Triggers – Promotional e-mails & SMS: This feature can be used to monitor clicks on any
emails or newsletters. A motor insurance customer clicking on a life insurance policy link can be sent
promotional emails about life insurance policies. A flyer on bundle offer with life insurance policy
and home owners’ policy can be sent via email.

Integration of AI with the existing Customer Relationship tool aids in development of various
features to enhance customer retention and improve customer satisfaction. This behavioural
analytics and customer segmentation can be beneficial to insurers of any size and type.
Personalization of offers and benefits, preferential pricing, upgraded product recommendations,
automatically triggered e-mails and SMS largely contribute to new business generation for any
insurance company. Apart from lead generation, it reflects that the insurers are interested in the
customer’s well-being and are looking out for their best interests.

Contact Author: krishrajaganesan@gmail.com