Chapter 4:
How AI Brings Value to the Entire Property Insurance Ecosystem
There are many ways that integrating AI into every process delivers real value for insurance organizations—and all these benefits stem from the ability to optimize data that humans would otherwise not be capable of processing.
Accurate data creates for successful decision-making.
Artificial intelligence is a powerful tool that facilitates insurance and reconstruction professionals at all levels of the supply chain to efficiently make accurate, objective, data-driven decisions. By leveraging AI, decision-makers across the property insurance ecosphere can create strategies that consider all factors relevant to current and future circumstances.
Whether you operate or work for a property insurance carrier or a property restoration contractor, success depends on accessing and analyzing holistic sets of data. Data drives all decision-making—from underwriting a policy on a property to creating a project estimate to strategizing and planning for the execution of reconstruction projects.
Over the last several years, there has been an exponential increase in available critical data and the number of property data sources for all insurance stakeholders. This wealth of readily available information can be game-changing—but only if you have mechanisms to extract relevant data and the tools to contextualize the data into actionable insights.
AI is a powerful vessel that will guide you to the correct destination.
It's like being in a state of hydration and then experiencing a flood. Even though you needed water in the first place, if you cannot swim or do not have tools to manage the water or make it drinkable, then it is useless—harmful, even. Water is integral to life across the entire ecosystem—but only if you can clean and manage it.
In the same vein, businesses need data. And, these days, they have access to a lot of it. However, data will only facilitate sustainability for your business if you can structure and analyze it to make it valuable and meaningful to every team within your operation. Suppose you don’t have a strategy to report and analyze information systematically. In that case, you can’t use data to ensure that projects are profitable and that you are sustainably growing your business while servicing your jobs effectively and efficiently.
As we’ve explained in previous chapters, AI is a data life raft. It is also a powerful vessel that will guide you to the most effective conclusions and decisions. Software driven by AI is one of the primary tools that processes massive quantities of data to bring clarity to users and turn overwhelming amounts of information into powerful insights.
Today, professionals use AI tools for a variety of functions across the property insurance ecosphere to reach more customers and shorten project lifecycles.
Artificial Intelligence transforms businesses across the insurance and restoration industries by:
- Taking repetitive, mundane tasks out of an adjuster’s set of duties so they can focus on tasks that demand human judgment and interaction
- Providing intelligence that helps contractors prepare for jobs with the right strategies and resources
- Facilitating consistency in all decision-making processes
- Minimizing risk for onsite workers by providing a complete picture of a claim/project environment
- Reducing overall operating costs for both carriers and restoration contractors, including the need for specific onsite work
- Giving all professionals a comprehensive, objective set of data and insights into every property
- Eliminating human error and oversight during decision-making or project execution
- Functioning as a virtual assistant so that claims professionals can remain at their desks while working on claims in multiple locations
- Decreasing fraud by identifying inconsistencies in data
AI will reduce many mundane tasks that potentially deter younger professionals from pursuing careers in these fields.
How AI Enables Insurance and Restoration Professionals to Overcome the Most Profound Challenges
There are several challenges facing the entire property insurance ecosystem, and these problems will only subside with innovative interventions.
Below, we will talk about AI’s role in overcoming the different obstacles that are present throughout today’s entire property insurance ecosphere:
- Climate Change and Environmental Uncertainty
In the coming years and decades, experts predict that climate change will cause the world to experience increased weather perils at a much higher rate. For one example, as explored in the 2023 CoreLogic Hurricane Risk Report, “climate change is expected to alter hurricane activity, increasing and intensifying hurricane-related risk not only across coastal counties in the United States but also further inland. Research suggests that, by the year 2050, hurricane risk will extend farther inland to locations that were previously shielded from consequential damage.”[16]
Increased hurricane activity is just one example of the consequences of climate change. From wildfires to earthquakes, insurers must prepare for changes and increases concerning every peril and extreme weather event.
Insurance carriers and their restoration partners must plan for a growing number of claims. The nature and geographical concentration of claims will also change, which adds another dimension to business planning.
As the uncertainties posed by these challenges continue to rise, Artificial Intelligence can help operations scale their businesses to meet the increased and unprecedented demand. Sophisticated AI-powered data models will help organizations across the property insurance ecosphere prepare for all possible outcomes in a number of ways.
For instance, AI technologies will help carriers and contractors determine both what kinds of claims to prepare for and the specific locations where certain types of claims will likely surface. Using AI-driven models and analytics to make informed predictions will become increasingly important. These forward-thinking models and datasets will enable carriers to prepare for all scenarios, so they don’t over- or under-allocate resources.
2. Labor Shortages
While the demand for insurance services is only increasing, the insurance workforce is in decline.
In a 2021 report, the U.S. Chamber of Commerce stated that the BLS estimated that over the next 15 years, 50% of the current workforce would retire, “leaving more than 400,000 open positions unfilled.” This report also went on to explain that “all facets of the insurance industry will struggle to replace these workers at every level, particularly because millennials have not shown significant interest in insurance careers—less than 25% of the industry is under the age of 35.” [2]
The Chamber of Commerce also reported that the challenges with attracting talent in the insurance industry include “a general perception that the insurance industry and its corporate culture is boring.” [17]
Artificial Intelligence provides solutions to both of the aforementioned labor problems. The ability of machines to perform specific tasks allows insurance operations to increase their scope—from underwriting insurance policies to claims intake to property restoration projects—without increasing the need for additional human capital. At the same time, AI will reduce many mundane tasks that would otherwise potentially deter younger professionals from pursuing careers in these fields.
AI enables professionals to focus on the meaningful part of their jobs – taking care of policyholders and customers. People today want to find fulfillment in their work – to make a difference in the world. Employees today want to find fulfillment in their work and make a difference in the world. AI enables professionals to focus on the meaningful part of their jobs like taking care of policyholders and customers.
3. Developing Customer Relationships Despite a Growing Number of Claims
No matter what part of the supply chain policyholders interact with, they expect personalized experiences with their insurance providers, as well as the restoration contractors they often see as an extension of the carrier. In a policyholder’s eyes, resolving a claim should feel like one streamlined experience.
An increasing number of claims and the potential for a reduced workforce will mean ongoing hurdles for insurance professionals in developing meaningful relationships with customers. However, AI technology provides avenues to deliver personalized customer experiences in any circumstance.
Through chatbots and greater access to data (and more of it), professionals will get more time and the precise information they need to better collaborate with business partners and customers. Working in tandem, all stakeholders can provide consistent answers and advice to customers. And when it comes to tasks like information gathering, data mining, and analysis, AI performs all the legwork, giving insurance professionals more time and invaluable intel to have productive conversations with customers.
Human insurance professionals must forge partnerships with AI technologies not only to remain solvent—but to allow their organizations to thrive throughout the different phases to come in the future (and the new challenges that go along with them).
In other words, how companies manage the combination of organic human intelligence with Artificial Intelligence will determine their future success in this evolving industry.
[17] https://www.uschamber.com/workforce/education/the-america-works-report-industry-perspectives