Redesigning the Future of Business through

Artificial Intelligence (AI)

By Nazlihasri Abdul Rahman, MII Head of Information Technology

The world is undergoing a digital transformation with the rise of technologies like the
Internet-of-Things (IoT) and Artificial Intelligence (AI). These technologies are increasingly
popular and continuously developing, both in daily life as well as in the workplace.
Businesses have had to re-strategize and redesign their services, offerings and internal
operations; to stay relevant and survive in this digital age.

Technologies and innovations produce tremendous opportunities in businesses. Despite

opening windows to new businesses, these opportunities come with fierce competitions
from competitors new and old, as well as numerous challenges that the business owners
must face to meet market expectations.

Designing a Digital Business

Organizations are adopting digital technology into their value-generation processes. This is
applied in various operational departments like customer service, research, manufacturing,
logistics, HR, finance and many more. Digital technology has three transformational forces:
Intelligence, Connectivity and Customer-orientation. These transformational forces are the
core components when designing a traditional business into a digital business.

When transforming businesses into digital businesses, a common ecosystem is used to

ensure the digital business works with other digitized offerings. For example, the rise of
Insurtech startups have changed the age-old tradition of how insurance policies and
premiums are created, calculated, marketed and paid. Insurance policies and premiums are
now quoted and sold online via the internet or mobile, and premium payments are
performed via online payment gateways. Hence, the success of Insurtech is dependent on
not just the insurance industry but also banking and mobile services. This ecosystem is
known as a Digital Arena, where a new digital business (online insurance) is co-created with
the help of other (normally more established) digital businesses (mobile, banking) that are
available within the same arena.

In a Digital Arena, the boundaries that define one business from another is easily blurred.
The distinction and niche of a business will be harder to identify and differentiate.
Companies must be prepared to re-strategize the future of businesses by embracing this
concept of co-creating joint value for customers.

Future of Insurance with AI

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The insurance industry is more than ready for AI disruption. Modern day customers
(specifically The Millennials) prefer to communicate with companies through modern
technology. This group of customers are the new consumer market who would most likely
opt for computer-generated advice rather than human advice.

Many insurance companies are already using artificial intelligence to some degree, and the
number of companies following in their footsteps is rising. Artificial Intelligence has never
been less expensive or more accessible, which means most companies don’t have a reason
not to adopt it in at least some form.

Claims Process Using AI

Insurance operators are known for their outdated work, which heavily relies on work
performed by insurance personnel. In simpler terms, the industry cannot work without its
large workforce. This large workforce is also responsible to market insurance products and
process each application. Not to forget the amount of work needed to process submissions
of claims. Overloaded workers will result in frustrated customers.

However, AI can be applied to improve the claims process. A new process of “touchless”
claims does not require any human intervention. This process uses artificial intelligence and
other technologies to report the claim, capture damage, audit the system, and
communicate with the customer. The “touchless” method allows clients the chance to file
claims without having to push their way through red tapes.

Insurance operators that have already automated some parts of their claims process will see
a significant reduction in processing time. AI-powered claims could also reduce or demolish
fraudulent claims. AI algorithms can identify patterns in the data and recognize when data is
fraudulent or at considerable risk of being fraudulent.

Customers and Chatbots

Chatbots are becoming increasingly popular, mainly because the technology is readily
available on customers’ mobile devices. In insurance, chatbots are used to answer basic
questions pertaining to company address, product knowledge, addresses, guide to claims
submission, etc. Effective chatbots can process concerns that are either typed or spoken
from customers and provide personalized service. To be truly effective, chatbots should be
able to process sentiments or emotions, to truly understand what the customer is asking
and how best to offer accurate answers.

Marketing and Underwriting

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A strong business strategy is vital for insurance companies to survive in the competitive
market. Nowadays, customers do not want to be bombarded with invasive questions and
surveys that provides data for underwriting purposes. AI can pull a customer’s data to
create a full profile that can be used to offer only relevant insurance products to that
customer. It will also record and save customer’s preferences, trends, patterns and habits;
for future business developments. For example, AI will be able to analyse driving patterns
based on data about a customer: number of recorded vehicle accident claims, healthy
lifestyle, stable job; data that could help lower insurance premiums. AI can analyse data
better than humans to more accurately predict each customer’s risk, thereby providing
customers with the relevant coverage and companies with protection from customers with
high risk. This mechanism of calculating the premium by tracking mileage and driving
pattern via embedded telematics devices is called Usage-Based Insurance (UBI). To a greater
accuracy, it measures several elements of interest to underwriters: miles driven, time,
location and the actual driving behaviour - Acceleration, Braking and Cornering (ABC). The
level of data collected generally reflects the telematics technology employed and the policy
holders’ willingness to share personal data. The insurance company then assesses the data
and charges insurance premiums accordingly.

http://www.fujitsu.com/global/microsite/vision/2017/?Rnavi

https://www.forbes.com/sites/blakemorgan/2017/07/25/how-artificial-intelligence-will-
impact-the-insurance-industry/#67ef68c96531