The insurance industry is no stranger to data. For decades, underwriters and actuaries have analyzed vast amounts of information to assess risk and set prices. However, as the industry evolves, the use of artificial intelligence (AI) becomes increasingly important in helping insurers stay competitive and meet the evolving needs of customers. The recent growth in popularity of generative AI models, like OpenAI’s ChatGPT, has opened the doors to even greater possibilities. In this post, I’ll provide a high-level overview of common Insurtech impact areas. I’ll showcase three specific companies that are leveraging AI heavily in their products.
Insurtech on the Rise
Over the past five years, there has been a rapid rise in technology-based innovations within insurance businesses and products. These innovations are collectively known as Insurtech. Insurtech is transforming the traditional insurance approach by leveraging advancements in technology, particularly AI. They use AI to enhance customer experience, streamline operations, and provide more personalized services. Many of these technologies have focused on the following areas of functionality:
- Improved underwriting processes
- Faster claims processing
- Greater flexibility and personalization of policies
- Fraud prevention
- Improved risk management
As the world continuously becomes more digitized, the insurance industry as a whole is adapting. With more companies investing in it (as we’ll discuss in the following sections), this trend is only set to continue. It’s an exciting space to watch for developments.
Kin, is a technology-forward home insurance company based in Chicago. The company was launched in 2016 with the mission of creating a more personalized experience for folks buying home insurance. Their platform makes informed recommendations regarding the appropriate insurance coverage for each unique property. Kin makes recommendations by analyzing an exhaustive data set about each home and the customer that includes more than 5,000 variables. The speed and accuracy of the quotes which Kin’s platform produces are impossible for a human underwriter to match. It’s Kin’s use of artificial intelligence that makes all this possible.
A common problem with traditional home insurance policies is that they are rigid and don’t adapt over time as the price of homes and materials change. This can easily lead to an underinsured situation where the policy is insufficient to cover the cost of replacement. Kin’s platform eliminates this problem by periodically reevaluating underwritten policies and comparing them with current market data to detect likely problems.
Because Kin can leverage its software to optimize many aspects of the business, it can operate much leaner as a company, with significantly lower expenses. This allows Kin to pass on the cost savings to their customers making them very competitive in the marketplace.
Clearcover is a car insurance company that prides itself on its advanced technological approach to providing the best experience for its customers. At the foundation of their technology is a proprietary AI-based tool, ClearAI. Clearcover leverages this tool in many ways across the business. On the quoting side of the business, similar to Kin, Clearcover’s platform helps customers obtain the right coverage based on their unique needs. However, the more impressive functionality comes into play in Clearcover’s ability to process claims.
ClearAI includes an advanced image processing component that can analyze images of a damaged vehicle and quickly determine if the incident is covered. Once ClearAI confirms eligibility, the platform can automatically issue a payout to the customer. These tools enable Clearcover to fully process and pay an eligible claim as quickly as within seven minutes. In contrast, insurance companies traditionally take days to process a claim.
As an insurance provider, Clearcover benefits greatly when company agents succeed at selling their products. As such, they have also extended ClearAI to include lead qualification tools. These tools help agents sift through the noise that comes along with the immense number of leads they evaluate. They can glean higher-quality leads quickly and achieve a superior customer retention rate.
Finally, DAIS Technology is making waves in the InsurTech world with their new product, UnderwriteGPT, based on Large Language Models and Generative AI. DAIS does not sell insurance. However, the company developed a suite of tools they provide to insurance companies. This suite enables them to improve their product offerings, bring products to market more quickly, and provide their customers with a better overall experience.
Similar to Kin and Clearcover, DAIS plans to market UnderwriteGPT as a tool to “streamline the underwriting process and improve risk assessment, ultimately leading to better pricing and coverage for policyholders.” DAIS developed UnderwriteGPT in partnership with The Paladin Group, a leading digital brokerage that specializes in transportation and innovative risk management solutions. The company has only shared sparse details explaining specifically what UnderwriteGPT does at this point since the product is just now reaching market readiness.
“We have been secretly developing UnderwriteGPT for about a year and are thrilled to finally unveil it to the public. We believe this solution will revolutionize the way brokerages and insurance companies underwrite policies and we are excited to see the impact it will have on the industry,” said Jason Kolb, CEO of Dais Technology. I look forward to learning more about its capabilities as consumers test the product in the market.
The Future of Insurtech
The infusion of modern technology in recent years has brought significant changes to the world of insurance. Companies such as Kin, Clearcover, and DAIS Technology have been leading the way in leveraging AI to revolutionize the industry. As technology advances at an unprecedented pace, the possibilities for innovation only continue to grow. From AI-powered customer service to wearable technology that monitors health data and adjusts premiums accordingly, leaders in the industry are not afraid to think outside of the box. The future of Insurtech is ripe with further breakthroughs that will benefit insurance companies and policyholders alike.