How Predictive Analytics in Insurance will Benefit the Industry in 2020
It’s hard to remember a time in the insurance industry when we didn’t use computers. Over the years, software, machine learning, AI and predictive analytics have been used to reduce human error, issues and expenses, as well as increase productivity, sales and profitability.
What exactly is predictive analytics?
Predictive analytics is a category of data analytics, used to make intelligent predictions about future outcomes based on internal and external historical data and analytics techniques. Predictive analytics tools and models can help insurance organizations use past and current data to accurately forecast future trends and behavior of insureds.
Predictive analytics has captured the support of a wide range of organizations (not just insurance), with a global market projected to reach approximately $10.95 billion by 2022, according to a 2017 report issued by Zion Market Research.
So how will predictive analytics impact the insurance world in 2020? Check out three ways, highlighted below, on how predictive analytics will benefit the industry in the year to come.
1.Streamline the Claims Process
With predictive analytics models and reporting, adjusters can easily analyze their historical claims processes and make informed decisions to increase efficiency and productivity. Organizations can use historical claim data to determine factors that could affect the outcome of current claims. This in turn streamlines the process, helping them quickly and precisely close claims that traditionally took weeks or even months to accomplish.
Companies like Lemonade are starting with an AI/behavioral-first approach. They use a chatbot to process claims faster and provide customers with faster payouts. These chatbots can review the claim, verify policy details and send it through a fraud detection workflow before instructing the bank to pay for the claim settlement. This is turn speeds up the process, frees up insurers to work on more high-risk claims, and reduce human error
2.Save Time, Money & Expenses
Predictive analytics systems help adjusters prioritize certain claims to save time, money, and resources. The platform will anticipate high risk, high cost, or high problematic claims early on in the claim lifecycle, allowing the adjuster to proactively implement procedures to drive a better claim outcome for the injured claimant and drive a better financial outcome. The predictive models help adjusters set reserves better, administer claims better and get the claimant back to work at a faster rate.
All data images, videos, or field notes can be funneled into a predictive analytics system, allowing for the adjuster to quickly read through years of entries and notes that were impossible for humans to sit and read through before. They can filter by keywords or phrases instantly, rather than manually sifting through years of notes to identify claim trends, issues, or outcomes.
3.Identify & Prevent Fraud
According to the FBI, the annual losses related to insurance fraud are as high as $40 billion, costing the average American family $400-$700 in increased premiums each year.
To combat this, insurers are using predictive analytics to identify and prevent potential fraud before it happens. Many turn to social media or online searches for signs of fraudulent behavior and using that data for future claims to monitor online activity for red flags.
Many have discussed using voice analysis devices to record claim statements or the initial call in to report the injury to detect within the human voice whether or not they’re providing a false analysist. This is implemented through truth analysis solutions that detect intent within the tone.
The Bottom Line:
Going forward, more insurers will use predictive analytics and artificial intelligence to help forecast events and gain actionable insights into all aspects of their businesses. Using analytics, insurers can gain a competitive advantage that saves them time, money and resources, while helping them accurately plan for future outcomes.
Organizations can also minimize the total number of claims by using a solution like SmartCompliance, a certificate of insurance tracking solution, to be sure proper risk transfer and subrogation are in place.