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?





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.”






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