AI And Motor Vehicle Insurance
Does AI and data hold the key to taking the grudge out of “grudge purchase” when it comes to vehicle insurance?
01/07/2024
There are many reasons why people may still
see car insurance as a grudge purchase. When
buying a new vehicle, getting insured can mean
losing time and money on phone calls for a
quotation. Others may feel that insurers are
just out to get them because they only see the
company when they get a payment notification
from their bank.
However you look at it,
the common denominator in this reputational
problem is that customer expectations or needs
aren’t being met, which creates a trust deficit.
“InsureTech or technology-led insurance
companies are working to turn the tide,” says
Keletso Mpisane, Head of Blink by MiWay. “Using
technology for everything from onboarding and
premium pricing allows us to offer frictionless,
customer-centric service that reminds people
that insurers are there to help when times get
tough.”
Technology like artificial
intelligence (AI), machine learning and smart
devices are just some of the tools that enable
InsureTech providers to change attitudes and
perceptions.
Improving operations with AI
Shedding the negative reputation should start
with simplifying the customer experience.
Generative AI models can help with this thanks
to their advanced conversational abilities.
“Along with getting rid of call-based data
capturing, AI chatbots can help make signing up
easier and reduce errors in the process, by
asking a series of questions in a way that feels
like you’re texting a friend,” explains Mpisane.
A McKinsey report argues that the adoption
of smart devices like home assistants or smart
phones and watches, is leading to a future of
increased smart products. They say these devices
will augment everything from eyewear to shoes.
This uptake of smart gadgets could unlock an
avalanche of new data, which insurers could use
to better understand their clients and offer
personalised pricing and real-time services.
“With the use of powerful AI learnings to
analyse this data, we can better understand
people and nudge them towards safer practices
that could save them money down the road,” says
Mpisane.
Everyday insurance
She adds that “technology is helping insurers
show their value beyond when we pay out claims.”
Advanced car trackers can give a clearer picture
of how a driver behaves. This information can be
used to provide on-demand services that leave
people feeling that insurance is a part of their
daily lives.
“Picture a person who
travels out of the country frequently. If our
tech can detect that their vehicle has been
stationary all month, we could have a clear
basis to offer them a reduced premium based on
the decreased risk that comes with their car
being parked at home,” says Mpisane.
Even
simpler features can prevent risks. An alert
about weather conditions that could damage cars,
could let drivers know that they need to move
somewhere safe.
When technology is used
in a customer-centric way, providers can
continually show their value proposition to each
client.
Machine learning vs fraud
The Blink by MiWay head explains that
“machine learning refers to the use of computer
systems or algorithms and statistical models
that draw inferences from patterns in data.”
With a wealth of user data and use of other
publicly available information, these learning
computers can help insurers spot patterns that
human assessors might otherwise miss. This is
particularly helpful when dealing with fraud.
Insurance fraud is not a victimless crime
that only hurts big companies. Other customers
can end up taking on higher costs because of
dishonest members making bogus claims.
The Insurance Crime Bureau estimated that 20% of
the R35 billion in short-terms insurance claims
paid out in 2019 were fraudulent. Just this year
a family trio was imprisoned for submitting 573
fraudulent claims to the Road Accident Fund.
With machine learning incorporated into
claims systems, these 573 illegitimate claims
can be turned into data points that help claims
assessors see how fraudsters work.
“By
using this technology to spot bad actors, we are
in a better position to pay out claims from
people who genuinely need it,” says Mpisane.
Earning trust
Shifting perceptions from being a grudge
purchase to a daily essential, means insurers
must meet consumers where they are and earn
their trust.
She concludes by saying, “if
we are only visible when collecting premiums, or
while on long, inconvenient phone calls, then
insurance will always be the recommended
medicine that leaves a bad taste in people’s
mouths. Technology gives us abundant
opportunities to prove ourselves and the value
we bring.”