Blockchain and Artificial Intelligence in the Insurance Industry

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Applications of Blockchain And Artificial Intelligence Technologies in The Insurance Industry
Executive Summary
Dwindling traditional profit pools, shifting competitor landscapes, and growing customer expectations are forcing traditional insurance companies to reconsider their business models by integrating digital technologies. One digital technology that promises to reshape the 300-year-old insurance industry in terms of enhancing customer relationships, delivering faster claim payments, reducing operational costs, and gaining competitive advantage is Artificial Intelligence (AI). The growing datafication of nearly all private and public life means that insurance companies have a trove of information to help guide their design of products that better align with customer needs (Deloitte). Given the prominence of data as the new gold, the role of AI in converting big data into actionable business knowledge and insights is key. The cognitive abilities of AI technology are advantageous to insurance companies in terms of developing more accurate customer risk profiles, faster contract processing systems, streamlining payment verification, lowering customer acquisition costs, combating fraudulent claims, and coming up with tailored insurance products.
AI has the potential to improve underwriting processes by conducting an in-depth examination of a broad range of pertinent factors to come up with accurate risk estimates and policy prices. The technology’s ability to assess all pieces of data in a granular and intricate manner means that insurers can develop tailored premiums that address the unique needs of each customer. Besides, AI has the potential to verify all claim details and identify instances of deception in a prompt manner thereby deterring fraudulent claims while also streamlining contract processing (Eling et al.). On the whole, AI has the potential to improve insurer processes of assessing risk, detecting fraud, processing claims, developing product offerings, all while heightening customer satisfaction levels. Another digital technology that is bound to revolutionize the insurance industry is blockchain technology. Unlike the traditional insurance industry where the terms of agreement between the insurer and the customer are regulated by a central decision-making body, the blockchain works according to the rules set by both parties.
The terms of the contract are accessible to all parties and stored in a safe and incontrovertible manner. Moreover, the rules encoded within the blockchain through smart contracts are enforceable automatically without any human involvement. All these features of the digital technology improve accountability, transparency, security, and efficiency in the insurance industry. By eliminating intermediaries in the insurance industry, blockchain technology can enhance insurance value chain through innovating business models that allow for faster development of new products and markets and more effective approaches to risk assessment, insurance agreements, and claims management. On the whole, the application of blockchain technology in the insurance industry will result in elimination of human error, faster processing of insurance claims, reduction ...