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Better insured with artificial intelligence

Artificial intelligence (AI) has long since found its way into the insurance industry. Customers benefit from numerous advantages. A well-balanced legal framework forms the basis for fair and non-discriminatory use of the technology.

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With the help of artificial intelligence, large amounts of data can be better structured and analysed.

Insurance customers benefit from AI in a variety of ways. For example, AI enables even faster claims settlement or smooth service around the clock.

  • Artificial intelligence supports the analysis and assessment of risks. This can be seen, for example, in the insurability of people with serious pre-existing conditions in term life insurance. For example, insurers can now offer insurance to carriers of HIV under certain conditions. A few years ago, this would not have been possible without the possibilities of artificial intelligence.
  • The insurability of buildings against floods was significantly increased by the evaluation of additional detailed data within the framework of the Geoinformation System for Flood Hazards of the Insurance Industry (ZÜRS) . 
  • Fully automated processes ensure faster claims settlement. For example, insured persons can now upload pictures of a damaged car via app immediately after a traffic accident. AI then immediately makes a decision on the repair or the amount of damage.
  • Customer inquiries at insurance companies can be processed faster by using AI-powered text recognition systems to streamline workflows and prioritise customer concerns. Typical examples are marriage or the birth of a child. In these cases, artificial intelligence can make suggestions for optimising insurance coverage to fit.

Decisions are made fairly and without discrimination

For customers, the most important thing is that decisions are made fairly and without discrimination, whether by AI or by a human. The following applies: Differentiation is not the same as discrimination. Insurers have always used algorithms for risk-based premium differentiation. The existing regulations offer protection in the analog world just as they do in the digital world. The German Federal Financial Supervisory Authority (BaFin) therefore has the possibility to review product suitability, calculation bases as well as the underlying algorithms and to intervene if necessary.

A differentiated view is necessary for personalised prices

In particular, when it comes to the use of personalised pricing, there are concerns that AI capabilities could exacerbate the risk of discrimination against consumers. A differentiated view is required here. For example, risk-based premium differentiation in the insurance industry based on personal information has to be fundamentally distinguished from personalised pricing as is common, for example, with online retailers. The extent to which insurance cover is possible and the conditions under which it is possible depends solely on the risk to be covered.

Concerns are taken seriously

The insurance industry is taking concerns about greater risk differentiation and the offering of behaviour-based rates seriously. With innovative tariffs, as with other tariff designs, the benefit for customers is the top priority. This is also ensured by the requirements of the European Insurance Distribution Directive (IDD). Customer autonomy before the conclusion of the contract and during and after the term of contract is of course preserved.