Artificial intelligence (AI) is one of the business world’s hottest trends right now.
Since the launch of OpenAI’s Chat Generative Pre-trained Transformer better known as ChatGPT in late 2022, leaders and decision makers across all industries have been pre-occupied with two questions.
How will AI affect their business model? And whether they are able to harness it successfully for commercial gain.
So will this powerful technology change the way insurance companies manage and mitigate risk for small businesses like yours?
Put simply, ‘yes’ and it’s already happening, Steadfast director of AI and Emerging Technology, Steven Tuften says. In fact, insurance companies have been early adopters of AI-powered tools and technologies.
“Machine learning, a form of AI, has been used for many years in insurance, to conduct advanced statistical analysis,” Tuften explains.
“Getting algorithms to adapt and learn, based on new data, allows actuaries to take statistics to the next level – to identify patterns that are difficult for humans to see”.
“It can enable insurers to segment customers and potential customers into groups or categories, using many more variables than they were able to incorporate, a couple of decades ago.”
“A lot of insurers are now using aerial and satellite imagery to assist them in the assessment process ”
Building better models with insurance AI
Over the upcoming years, insurance companies may look to utilise AI to develop and refine complex models to predict the impact of natural disasters, such as cyclones, storms and floods, at a granular level.
That means they may be better able to gauge the risk faced by individual customers and provide tailored coverage and premiums that reflect that risk.
If the above is implemented, standardised policies that don’t differentiate greatly between businesses will no longer be so prevalent, Tuften predicts.
“That’s a plus for small businesses because they’ll be paying for exactly the cover they need,” he says.
Can AI help small businesses with claims assessments?
AI will also play an increasingly important role in the claims process.
“A lot of insurers are now using aerial and satellite imagery to assist them in the assessment process because, in some instances, it’s cheaper than sending someone out to look at the damage,” Tuften says.
“AI is great at analysing aerial imagery and highlighting features on those images far more quickly than a human being could ever manage. It can calculate the number of buildings, the roof area, how many solar panels are on your roof and determine whether there’s fire damage to nearby vegetation.”
Insurers will also be able to reduce the incidence of fraudulent claims relating to pre-existing building damage, through potentially the use of AI to compare current and earlier aerial imagery.
That’s good for customers who do the right thing because it can help to keep premiums affordable, Tuften says.
Why you shouldn’t rely on AI for expert advice
Technology is powerful but so is the knowledge an experienced insurance broker or adviser can bring to the table. Every business is different and a broker or adviser helps you to understand your risk, your budget and your priorities.
Gaining an understanding of your business’ unique needs can enable them to source and tailor policies that safeguard your assets and operations. For a discussion about your requirements, contact your broker or adviser today.
Important notice – Steadfast Group Limited ABN 98 073 659 677
This general information does not take into account your specific objectives, financial situation or needs. It is also not financial advice, nor complete, so please discuss the full details with your insurance broker or adviser as to whether these types of insurance are appropriate for you. Deductibles, exclusions and limits apply. These insurances are issued by various insurers and can differ.
