How AI is Helping Proactive Risk Management

The insurance industry is traditionally a reactive industry viewed as a necessary evil to most consumers. Consumers hope they never have to talk to their insurance company because it means they’re having a really bad day. In fact, 10 percent of consumers have never interacted with their insurance company because the only touchpoints insurers create are setting up a policy and renewing the policy unless a claim is filed. 

However, new trends in the industry may better the relationship between insurer and customer. Within the next 10 years, it is possible that a proactive risk management approach may take over the insurance industry. This approach could integrate Artificial Intelligence (AI) and traditional human methods to prevent non-natural-disaster-related incidents typically covered by insurance policies. A proactive approach to insurance could help consumers view their insurers as partners in asset protection instead of just a necessary evil.

What is proactive risk management?

Proactive risk management is the process of identifying and remedying potential risks before they become legitimate problems. 

Think about this: approximately 14,000 water damage claims are made daily totaling about $123 million in claims damages every day. If insurance carriers introduced preventative measures such as arranging for plumbers to inspect plumbing on a regular basis for their customers, issues could be identified and fixed before they become a disaster. This could also apply for preventing electricity fires, roof leaks and other problems. 

Proactive risk management is a popular idea. In fact, 34 percent of people said they would consider switching insurance companies if a company offered preventative loss and protection services. 

How can AI help?

Integrating AI into the insurance industry could save insurers $390 billion by 2030. Whether you realize it or not, AI has already begun to sneak into the insurance industry in the form of tools to enhance customer service. With chatbots, data is recovered more quickly so questions can be answered efficiently. AI is also able to streamline claims management making those returns that much faster to process. 

With the growth of the Internet of Things and smart devices, AI can help with proactive risk management. Already companies are introducing smart water management that can shut off the water in the event of a problem, and smart smoke detectors that identify types of fires and carbon monoxide. 

Many insurers already offer discounts or prevention monitoring for their customers. A number of insurers have partnered with home security companies and offer discounts for customers that install one. Insurers could use that information when underwriting home-insurance policies. The same can be done for car insurance firms that already offer programs that collect and analyze telemetry data about the driver. 

All of these AI forms can be used to collect and analyze data that prevent hazards and add to the prevention of large payouts. 

Providing a proactive approach to the risk management aspect of insurance might be the future of the industry—and getting ahead of the curve is good for insurance companies. Staying ahead of the game can keep your business at the front of the line of innovation, but to do so, you need a strategy. If your company is interested in growing in the proactive risk management sector by integrating AI or traditional methods, you need a good team of people to lead the way. 

At The James Allen Companies, we know a thing or two about the insurance business, having been in it ourselves. We are committed to finding technology specialists who want to accelerate your business into the future. We recruit the candidates who are knowledgeable in AI, risk management, sales and more to make sure your business stays ahead of the trend and is ready to serve your customers. 

Give us a call today to see how we can help your business join the future of insurance.