To say that digital is a godsend to the insurance industry may be the understatement of the year. Thanks in part to artificial intelligence (AI).
Juniper Research estimates that the value of AI underwritten insurance premiums will exceed $20 billion by 2024, up from an estimated $1.3 billion in 2019. This growth will be driven by streamlined underwriting processes, faster customer onboarding and reductions in operational costs enabled by AI.
The Juniper Research, Insurtech: Impact Assessments, Insurer Readiness & Market Forecasts 2019-2024, highlighted that efficiencies in underwriting will be enabled by increased use of telematics and IoT management tools in the motor, home, life and health insurance sectors.
Insurers’ increased access to operational and behavioural data will enable enhanced data analysis capabilities; allowing insurers to guard against evolving risks.
Asia auto industry riding high on AI
According to the McKinsey report, The road to 2020 and beyond, the auto industry grew EUR 54 billion profits in 2012, significantly more than the EUR 41 billion of 2007 and the prognosis for future growth is even better. By 2020, global profits could increase to EUR 79 billion.
One beneficiary technology rising from this growth is telematics forecast to grow to $5.4 billion by 2024, from a base of $1.2 billion in 2019. It forecasts that this growth will be driven by increasing support from automotive OEMs, as part of wider connected car strategies. Asia, especially China, will drive telematics growth, increasing its revenue share from 15% in 2019 to 33% in 2024.
AI to help in claims processing
Riding on this growth is artificial intelligence (AI) technology which is expected to bring cost savings of up to $2.3 billion by 2024, as insurers exploit efficiencies achieved through the automation of resource-intensive tasks.
Juniper Research also pointed to the health insurance industry as benefiting from the use of AI, using the technology to reduce operating costs and enable competitive pricing. It anticipates that advances in NLP (Natural Language Processing) will enable insurers to leverage the abundance of existing unstructured data, allowing them to manage and create value from more data sources, creating streamlined processes.