The insurance industry is one of the oldest and most critical industries in the world. ‘Trust’ is the most important currency in this industry and hence insurance was always a people-intensive industry. Whether it is an agent who sells policies or surveyor who assesses claims, insurance companies always had to rely on people to build customer trust. A large part of claim assessment is to monitor ‘fraud claims’ – and until recently, the only way to assess claims was to manually investigate on a case by case basis. With the advent of technology, there is a big disruption coming to the insurance industry.
According to the estimates of Indiaforensic Research, Indian Insurance industry makes a loss of Rs 30,401 crore every year due to fraud claims. In other words, a loss for every insurance company is 8.5 per cent of revenue to the frauds. Sushant Reddy, Founder and CEO, AskArvi believes that life insurance sector contributes around 86 per cent to the frauds whereas non-life insurance sector contributes over 14 per cent of the fraud claim cases.
With the help of Internet of Things, Machine Learning and Artificial Intelligence, insurance companies are bracing themselves for massive change. Let’s look at a couple of examples of how technology is helping solve ‘fraud claim’ problem:
Mobile Insurance:
Used mobiles have always been very tricky – they are high value, moveable assets with a high potential of ‘fraud claims’. When someone buys a used mobile, how would an insurer know that the device is working well at the time of buying? Physically inspecting the device might be very expensive and not economically viable for insurance companies. Now insurers are looking at advanced mobile apps that on installation can diagnose the vital stats of a mobile phone without manual inspection. There are intelligent algorithms that also identify any major screen cracks on a mobile phone. Intelligent diagnosis can open the mobile insurance industry and significantly reduce frauds.
Car/Bike insurance: Owners of private cars/bikes who want to renew insurance after expiry need physical inspection by a surveyor. This is usually an expensive proposition for the insurer and a tedious process for the customer. Image recognition technologies are now deployed to assess damages to the car if customer uploads pictures of his car. Bots can identify potential damages and give a real-time assessment to customer enabling an instant policy issuance.
There are plenty of use-cases that startups and insurance companies are actively solving using technology. Technology not only prevents frauds but also opens up new product lines for insurance. Aside from reducing the chances of fraud claims, technologies like IoT, blockchain, artificial intelligence will also help insurers lower premiums across the board.
A lot of product lines that were unviable to insurance companies suddenly become attractive from a business standpoint. With India set to become a 5 trillion dollar economy in coming decades, there is a massive need to insure the increasing assets of Indians.
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