AI and motor insurance

The impact of AI on the motor insurance industry

The integration of artificial intelligence (AI) into the motor insurance has been a long time coming, and over recent years, it’s gone from being a newly introduced technology, to almost being expected.

Companies are harnessing AI capabilities to revolutionise different aspects of motor insurance operations, ranging from insurance assessments through to vehicle maintenance. But what impact is AI having exactly, what does the new-norm motor insurance look like, and most importantly, how does the integration of AI tech work together with the real-life people behind the scenes?

AI can enhance efficiency in insurance assessments, but it can’t empathise like humans can

There’s no doubt about it, AI-driven processes are reshaping insurance assessments within the motor insurance whereby visual assessment algorithms allow insurers to accurately evaluate car damage, estimate repair costs and expedite claims processing.

And whilst yes, this is a hugely streamlined approach which not only enhances efficiency, as well as also ensuring a timely resolution for policyholders, the technology will never be able to empathise with the policy holder in the same way a real-life person can.

Technology can be great to automate processes, but speaking with a human on the other end of the phone can go far in fostering customer relationships, loyalty, and trust.

AI can boost vehicle performance optimisation, so humans can stay safer behind the wheel

When predictive maintenance systems are powered by AI, this can work to transform complete vehicle maintenance practices, enabling operators to proactively identify potential issues and pre-empt maintenance interventions.

In fact, by analysing data from sensors and vehicle diagnostics, AI algorithms can also predict component failures too, as well as optimise maintenance schedules and minimise downtime.

Naturally, this proactive approach not only enhances vehicle reliability but also reduces operational costs for fleet owners and automotive manufacturers, so it’s a very popular use case of how AI can make such a positive impact on the sector and a prime example of how the data can be used to protect the people operating those vehicles too by keeping them safe.

AI can personalise customer experiences to a degree, but it will always be people-first

AI-driven technologies do have the power to enable motor insurance stakeholders in delivering personalised customer experiences tailored to individual preferences and needs, sometimes without the need for human intervention at all.

Beginning with customised vehicle recommendations based on driver behaviour and virtual car show-rounds, through to personalised insurance premiums determined by driving patterns, AI algorithms can leverage data analytics to enhance customer engagement and satisfaction.

It’s a personalised approach which has been proven to strengthen brand loyalty and foster long-term customer relationships alike, especially as younger tech-savvy drivers come into the age of driving and are expecting a more digital experience rather than the historical showroom visit.

However, whilst it’s undoubtedly a very clever technique, nothing will ever beat the 1-2-1 personal customer experience. Anything from recognising the person dropping off their vehicle, to having the same consistent representative always answering their calls or emails, building 1-2-1 relationships helps to build the very best of customer bonds. After all, AI-tech might be quite clever, but it can’t deliver a smile, put a customer at ease or relate to their circumstances in the same way a human can.    

AI can bring collaboration and innovation, but people can think BIG

Collaboration between automotive manufacturers, insurers, technology providers and regulatory bodies is essential to drive innovation and ensure responsible AI adoption in the motor insurance, and by fostering partnerships and sharing best practices, stakeholders can collectively address challenges, develop industry standards, and unlock the full potential of AI to shape the future of mobility.

Here AI-tech can build these suggestions based on the data they already have to hand, but humans can go one step further in looking to new opportunities on the horizon. This is because whilst technology can predict what might work in the future using past data patterns, people can look beyond that, and expand their personal relationships to think bigger, experiment and trial new ideas. 

Ultimately, AI does come with its challenges and considerations

Whilst AI brings significant opportunities for innovation in the motor insurance, its adoption also raises important considerations and challenges, particularly around how it goes hand-in-hand with humans. For example:

AI relies heavily on data

Often sourced from various sources including scraping publicly available information from the internet, AI technologies raises important ethical and legal considerations.

Although not technically illegal, scraped data may be subject to copyright and using it without permission from the copyright owner, especially for commercial purposes, could lead to legal consequences.

What’s more, the use of such information must be evaluated in the context of data protection regulations like the General Data Protection Act (GDPR), which notices are increasingly perceived as mere checkboxes akin to terms and conditions, and raises concerns about whether consent is truly informed and freely given, depending on how it is presented.

Compliance with GDPR requirements is paramount to ensure the ethical and legal use of data in AI applications within the motor insurance, but it’s not always a clear line between what data is useable in this sense, and therefore causes ethical concerns amongst the motor insurance.

AI can be unconsciously biased

AI systems play a crucial role in supporting complex underwriting decisions within the insurance industry, and whilst it’s important that underwriters refrain from basing insurance eligibility decisions on factors such as age, gender, race, religion or sexual orientation, there’s a risk that AI solutions could inadvertently make discriminatory decisions due to hidden biases, which are both illegal and unethical.

After all, the effectiveness of an AI system hinges on the quality of the data it’s given, and so it’s possible that the algorithms could pick up words such as “women’s” or “teen” and therefore build an unconscious negative trend.

AI may sometimes have the power to discredit claims

Automated claims processing may pose challenges in explaining decision-making to claimants, potentially undermining insurer credibility. This means that for any insurers utilising AI-powered technology in their claims handling, they must also prepare a back-up plan for this by ensuring staff possess the necessary skills and knowledge for complex responses.

Ultimately, this is because personal judgment may be overridden by computers without clear understanding or enough context, and the result of this could be unfair complaints or loss of custom.

And finally, no matter how much AI-technology progresses, it will never be human

Striking a fine balance between innovation and responsibility is essential to ensure ethical AI practices and mitigate associated risks, and whilst yes, AI is reshaping the motor insurance landscape and will continue to do so, it’s important to remember that the technology is there to complement the skills of a real-life person, to oversee the technologies, to offer a human-to-human experience and to bring something to the table that AI still in some places lack: trust.

At EDAM, our employees play a crucial role in upholding our reputation for service excellence and ensuring that every interaction with EDAM is memorable and satisfactory. But, to put it simply, we just really care.

Working for EDAM is more than just a job; it’s a commitment to making a positive difference in the lives of our customers, and aim to make every difficult journey easier by continuously growing together, improving ourselves, our systems, our services, our processes and our people to deliver best in class accident management services.

In fact, every EDAM employee is committed to delivering exceptional service and upholding the highest standards of quality, and when customers see our employees in their distinctive EDAM uniforms, they immediately recognise the dedication and professionalism that define our company.

What’s more, we also believe that familiar faces can create a sense of rapport and connection, fostering positive relationships between our team members and customers. It also helps to reassure customers that they’re not being passed around from pillar to post between different teams, and they won’t need to repeat themselves on multiple occasions – all of which, can help to reduce any additional stress and create a smoother overall customer experience.

So, if you’re in need of our help and assistance, please don’t hesitate contact us. We’ll be happy to help whenever you need us.

Reach out today.