As the only model in the nation, LIC led the participants when the private insurance industry first gained traction in India. And LIC carried out every procedure by hand. As a result, the insurance industry in India began investing in technology quite rapidly. Businesses first made investments in core systems and applications. Later, they developed mobile applications, Web applications, portals, and so on.
However, private insurance companies are now experimenting with cutting-edge technology like machine learning and artificial intelligence.
In an interview with Rakshita Madan of Mint, Rajesh Krishnan, Chief Operations Officer of Bajaj Allianz Life, discussed how the sector should adapt to new technologies like artificial intelligence (AI) and use it to improve the customer experience.
The following are condensed quotes from that interview:
When did the insurance sector begin to undergo a technological revolution?
You could argue that artificial intelligence (AI) and machine learning (ML) only really gained traction in the last ten or so years, as a result of increased discourse. Everyone, in my opinion, talked about AI and ML, but we’ll have to wait and see what it actually accomplishes. A life insurance firm like ours—I’m not talking about general insurance—started investing in artificial intelligence since risk management was a priority when we were first developing use cases for the technology. When you effectively manage risk, you can turn a profit.
What are some ways that your industry can use AI and ML into its processes?
We were able to screen out the wrong customers and streamline the onboarding of the appropriate ones by using artificial intelligence to better understand the risks associated with each one of our customers. Thus, by developing these models, we were able to forecast a client.
As a result, the industry found it easier to underwrite and to determine a product’s price.
Therefore, the first application of AI was risk management.
It also made it easier for us to get our renewals. Since the insurance business doesn’t make any money in the first year and all of its profits start to come in later, renewal collection is where the money comes from.
With these technology, where do you think we are headed?
As we move forward, developing these models will play a major role in helping us develop self-service. That makes for one of the most fascinating features of India’s demographics. As you are aware, our population is really young. Thus, almost 34% of our clientele are under the age of 19, and another 18% are under the age of 29. Given that over half of India’s population is under 29 years old, anything that has worked for our generation in the past is unlikely to work for the future generation, whose expectations are completely different.
Therefore, in order for any insurance firm to stay in business for the long run, we must begin to change the way we think and reset ourselves. It is likely that your generation will find it unacceptable to purchase an insurance from a salesperson that visits your home. It’s better, you know, for me to have access to all the facts. Now that people are much more aware of the issue, I know exactly what has to be done.
How has the insurance business been affected by COVID?
For us, COVID was a huge windfall. All of a sudden, everyone sensed the existence of a “unpredictable eventuality.” Anyone can experience it, so I need to be ready for it. However, other headlines have already supplanted this one, so it has already been forgotten, just like every other newspaper headline in our sector.
Will AI eliminate jobs? And how much?
Absolutely, without a doubt. What kinds of employment will it replace the ones that it takes away? It will eliminate non-value-added jobs. I can offer you an excellent analogy: whenever you enter a department store, a security officer will ask you to show your identification. He will then either rip or stamp the bill. We now need to ask: Is it really necessary? Will that guy’s employment be eliminated by AI? Absolutely, without a doubt.
There are jobs for everyone if you concentrate more on value-adding tasks, which are only capable of being understood by human minds.
Looking ahead a few years, I’m just imagining what might occur.
To stop AI, you also need the human mind. Because of what’s happening with generative AI, AI that goes beyond a certain point may end up becoming a threat overall.
Naturally, the benefit of machine learning is that it can be used with AI to produce self-learning, but the learning must be appropriate.
AI has two main applications, in my opinion. The first is for eliminating inefficiencies from the system, which improves risk management for insurance companies and increases customer value and profitability. AI can make it easier for my customers to browse my website. For instance, when a visitor arrives, AI can anticipate what they will look for based on your past activity. It can also provide you a gentle reminder to change your office. Would you wish this address to be updated?
The industry is currently concentrating on creating self-service models in order to meet the demands of the younger generation.
