Chapter 4:
How AI Brings Value to the Entire Property Insurance Ecosystem
AI delivers real value to insurance organizations in a multitude of ways. Many of these benefits stem from AI's ability to optimize data that humans would otherwise not be capable of processing.
Accurate data drives successful decision-making.
Artificial intelligence is a powerful tool for insurance and reconstruction professionals at all levels, empowering everyone across the supply chain to quickly make accurate, objective, data-driven decisions.
AI enables decision-makers to craft resilient strategies that weigh every relevant factor, evaluating both the current landscape and a wide breadth of potential future events and circumstances.
Success is achieved by accessing and analyzing the broadest spectrum of relevant data. Decision-making is central to all insurance-related jobs—from underwriting and claims dispatching to adjusting and reconstruction work. As a result, everyone in this market benefits from the effective use of AI, which allows them to focus on strategic initiatives.
Over the last several years, there has been an exponential increase in available critical data, as well as property data sources. This wealth of information is game-changing for the industry. However, businesses can only turn it into value when professionals have the mechanisms to extract relevant data and the intelligence to break it down into immediate, actionable insights.
AI is a powerful vessel that will guide you to the correct destination.
It’s like needing hydration but being hit by a flood. You need the water, but without the tools to filter or partition it, it becomes useless—even harmful. Water is integral to life across the entire biological ecosystem, but only when you can clean and manage it.
In the same vein, businesses need data. And today, they have access to a flood of it. However, just like water, data will only facilitate sustainability for your business if you can structure and analyze it to make it valuable and meaningful to every team within your operation. Without a strategy to report and analyze this information systematically, you can’t use it to ensure projects are profitable and that you are sustainably growing your business while servicing your clients effectively and efficiently.
AI is your data life raft. It is a powerful vessel that guides you toward the most effective conclusions and decisions. Software driven by AI is the primary tool for processing massive quantities of data, bringing clarity to users and turning overwhelming information into powerful insights.
Today, professionals use AI tools for a variety of functions across the property insurance ecosphere. AI helps organizations reach more customers and shorten project lifecycles.
Artificial Intelligence transforms insurance and restoration businesses by:
- Facilitating accuracy and consistency in all decision-making processes.
- Freeing onsite professionals by automating repetitive, mundane tasks, allowing them to focus on human judgment, compassion, and engagement.
- Providing intelligence to help contractors prepare for jobs with optimal strategies and resources.
- Minimizing risk for onsite workers through a complete, data-driven picture of the claim or project environment.
- Reducing overall operating costs for both carriers and contractors, including the necessity of specific onsite work.
- Delivering a comprehensive, objective set of data and insights for underwriting, estimating, and general planning.
- Eliminating human error and oversight in decision-making and project execution.
- Functioning as a virtual assistant, enabling claims professionals to manage claims in multiple locations without leaving their desks.
- Decreasing fraud by rapidly identifying data inconsistencies.
AI reduces many mundane tasks that potentially deter younger professionals from pursuing careers in these fields.
AI to Overcome the Most Profound Challenges
Challenges for the property insurance ecosystem demand innovative approaches. Below, read how AI can help tackle the primary obstacles facing this industry:
1. Climate Change and Environmental Uncertainty
In the coming years and decades, experts predict that climate change will cause the world to experience increased weather perils at a much higher rate.
For one example, according to Cotality's recent hurricane risk report, “climate change is expected to alter hurricane activity, increasing and intensifying hurricane-related risk not only across coastal counties in the United States but also further inland... by the year 2050, hurricane risk will extend farther inland to locations that were previously shielded from consequential damage.”[16]
It's not just hurricanes, either. Insurers must prepare for changes and increases concerning every peril, from wildfires to earthquakes. The nature and geographical concentration of claims may also shift or expand, adding another dimension to smarter business planning.
AI provides the capacity to scale operations to meet this increased and unprecedented demand. Sophisticated AI-powered data models will help organizations across the property insurance ecosphere prepare for all possible outcomes in a number of ways.
AI technologies will help carriers and contractors determine both the nature of potential future claims and the precise geographic concentration of future risk and loss. Using AI-driven models and analytics to make informed predictions will become increasingly important. These forward-thinking models and datasets will enable carriers to prepare for all scenarios, ensuring optimal resource allocation.
2. Labor Shortages
While the demand for insurance services is only increasing, the insurance workforce is in decline.[2]
The United States Chamber of Commerce reported that the challenges with attracting talent in the insurance industry include “a general perception that the insurance industry and its corporate culture is boring.” [17]
Artificial Intelligence provides solutions, allowing companies to get more done with the human resources they do have, all while putting a modern, appealing spin on insurance and restoration work to attract younger generations.
The ability of machines to perform specific, rote tasks allows operations to expand their scope—from underwriting and claims intake to property restoration—without requiring additional human capital. At the same time, AI reduces many mundane tasks that would otherwise potentially deter younger professionals from pursuing careers in these fields.
People today want to find fulfillment in their work—to make a difference in the world. AI enables professionals to focus on the meaningful side to their jobs—taking care of people in some of their most difficult times.
3. Developing Customer Relationships Despite a Growing Number of Claims
No matter what part of the supply chain policyholders interact with, they expect personalized experiences. They want smooth dealings with their insurance providers and the contractors that they see as an extension of the carrier. Claim resolution should feel like one streamlined experience for every homeowner.
With rising claims and a reduced workforce, insurance professionals lack the capacity to develop meaningful relationships with customers. However, AI technology provides avenues to deliver personalized customer experiences in any circumstance.
By conducting all information gathering, data mining, and analysis, AI handles the legwork for professionals, enabling them to have productive customer conversations.
For instance, with chatbots taking care of basic Q&As with customers, and by having better access to data, professionals can carve out time and easily gather the intel they need for better collaboration with business partners and customers. Working in tandem, all stakeholders can provide consistent answers and advice to customers.
How companies manage the combination of organic human intelligence with Artificial Intelligence will determine their future success in this evolving industry.
[17] https://www.uschamber.com/workforce/education/the-america-works-report-industry-perspectives