Insurance companies are very much focused on managing risk. Thus, predictions become very important. With AI (artificial intelligence), insurance companies can assess the energy efficiency of a house or the probabilities that there might be a fire or similar occurrence in a building, as examples.
“To take advantage of that solution, you need to change how you are selling insurance,” explains Joshua Gans, professor of strategic management, University of Toronto. “Because what the customers would like is that information so they can de-risk their house and not have to pay insurance premiums.”
Here is how artificial intelligence can help in insurance:
- Assess the risk profile of a house for potential accidents or damage.
- Tell customers if you do these things, it can lower the risk of activity.
- Charge customers a higher premium because there is a higher risk.
Looking to the future, the business of insurance is going to change—and there are going to be winners and losers. Now, insurance companies need to determine how AI will change how they sell insurance.