The future of AI in India’s insurance industry


Artificial intelligence (AI) is transforming the Indian car insurance industry. Computer vision is now being applied to improve claims processes, while data and analytics have the potential to hyper-personalize insurance products and increase market penetration.

Recent advances in computer vision algorithms using deep learning allow for fascinating results in image classification, object recognition, and image segmentation. These use cases have generated growing interest among insurers, who are working to simplify and speed up insurance claims processes.

Auto insurance claims are usually complicated and time consuming. The intervention of human experts to assess damage to a vehicle, identify possible fraud and approve claims contributes to this long process. The need to submit documents is another.

Long turnaround times negatively impact customer satisfaction, which in turn reduces the likelihood of policy renewals. Lengthy claims processes also mean more expense on the part of the insurance company.

Motor vehicle damage recognition systems reduce the time and effort spent on human inspection for insurance companies, car rental companies and automotive repair service providers. Powered by deep learning, the computer vision system automatically detects vehicle parts and analyzes the type and severity of damage. After the inspection, a report can be created with an overview of the damage and the estimated repair costs.

How it works? First, a customer submits an online form with photos of the damaged vehicle in question. The images are then processed by a computer vision program, accurately identifying the affected parts and the extent of damage to them.

Then, AI-based algorithms estimate the damage cost. These algorithms are developed using multiple data points from a wide variety of sources: past claims reports and vehicle model specifications, to name a few.

Benefits of Automotive Damage Recognition

  • Accuracy: transparent claims settlements that are otherwise subject to human error if done manually.
  • Scalability: Provides an automated framework using advanced techniques and algorithms to scale the claims process.
  • Agility: Benefits Insurance companies, car rental services and car repair services quickly provide cost fixes for damages analyzed by the system.

Other Potential Uses of AI in Auto Insurance

Besides the application of computer vision in claims settlement, AI has the potential to revolutionize the auto insurance industry by enabling hyper-personalization. Earlier this year, the Insurance Regulatory and Development Authority of India (IRDAI) allowed insurance companies to offer “pay as you drive” and “pay how you drive” policies to increase market penetration of industry.

The former takes vehicle mileage into account when calculating premiums, while the latter takes driver behavior into account. In both cases, these insurance products offer better rates to certain customers: those who use their motor vehicle less than the average motorist and those who adopt better behavior behind the wheel.

As with vehicle damage recognition systems, AI-based algorithms can sift through multiple data points to determine the following:

  • What is the standard for safe driving in a particular case and if a claimant has exceeded those standards, in which case they would not be able to make a claim
  • What are the parameters of safe driving behavior and if a potential customer exceeds these parameters, in which case higher premiums would be warranted

The hyper-personalization of these products is what IRDAI hopes to increase non-life insurance penetration which is currently at 1 percent. According to the agency, India is the third lowest among 12 countries in its annual report and significantly below the global average of 4.10%.

How to deploy AI in insurance

Here are several steps for insurance companies to incorporate AI into their operations:

  • Development of a coherent strategic plan
  • Executing a Comprehensive Data Strategy
  • Create the right talent and technology infrastructure

These three things can be daunting, especially in a risk-averse industry. What insurance companies can do is leverage the expertise of service providers to develop AI, machine learning, and data management solutions. This allows the former to deploy AI in their operations in less time and at a lower cost.

The future of insurance

AI is and will continue to transform the insurance industry. The application of computer vision simplifies claims processes, reducing wait times while improving customer satisfaction and policy renewal rates. With additional training, computer vision programs can flag instances of fraud, generating savings for the insurance company.

With the introduction of products such as pay-per-drive and pay-per-drive, insurance companies can acquire a wider range of policyholders. These policies are just the proverbial tip of the iceberg when it comes to hyper-personalization of AI-powered insurance products.

Industry players should not be left behind when it comes to deploying AI solutions. By leveraging the expertise of well-known service providers, they can stay ahead of the competition and gain an edge, while generating more savings.



The opinions expressed above are those of the author.


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