Non-life premiums are forecast to grow by an annual average of 8.3% during 2024‒28, driven by economic growth, improvement in distribution channels, increasing industry adoption of insurtech and a favourable regulatory environment.
26 Aug 2024 | 2676 Views | By Rohan Malhotra, CEO, Roadzen
The global auto insurance industry is undergoing a transformation driven by rapid advancements in Artificial Intelligence (AI). From personalized risk assessments to automated claims processing, AI is enhancing customer experiences, while making auto insurance more affordable and accessible. This global trend is making substantial inroads in the India market, currently ...
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The global auto insurance industry is undergoing a transformation driven by rapid advancements in Artificial Intelligence (AI). From personalized risk assessments to automated claims processing, AI is enhancing customer experiences, while making auto insurance more affordable and accessible. This global trend is making substantial inroads in the India market, currently the fastest growing insurance sector among G20 countries.
Non-life premiums are forecast to grow by an annual average of 8.3% during 2024‒28, driven by economic growth, improvement in distribution channels, increasing industry adoption of insurtech and a favourable regulatory environment.
As cars on Indian roads become increasingly connected, vehicular data is enabling AI applications that are changing the way insurers and customers interact. AI-powered underwriting, claims processing, and fraud detection deliver significant cost savings and improved efficiency for insurers.
Creating personalised driver profiles through telematics and computer vision allows insurers to price their policies better and offer usage-based insurance (UBI) to their customers while lowering overall risk by improving driving behaviour and preventing collisions through real-time automatic alerts. This leads to faster turnaround times, reduced operational expenses, and improved efficiency across the insurance value chain.
Personalised Risk Assessment
Traditional insurance models rely on manually collected demographic and historical claims data to determine premiums. AI models enable insurers to analyse individual driving behaviour, vehicle usage patterns, and environmental factors to offer personalized coverage. In India, where driving habits and road conditions vary widely, personalized risk assessment ensures fairer pricing. Through telematics real-time data on driving speed, braking patterns, distracted driving and mileage is collected. This data is analysed by AI trained for local conditions to create accurate driver profiles, allowing insurers to offer customized policies that reward safer drivers through lower premiums.
Improved Road Safety
While India has about one percent of the world’s vehicle population, it accounts for about six percent of the global road traffic incidents. In 2022 alone, India reported nearly 169 thousand fatalities due to road accidents. Advance Driver Assistance System (ADAS), computer vision and telematics are a gamechanger for preventing collisions and improving driver behaviour. Locally trained AI models identify potential driving risks and issue voice-based alerts to correct driver behaviour, minimizing the likelihood of accidents caused by minor oversights. This reduces the number, frequency and severity of claims, benefiting both insurers and customers. Personalized coaching insights and video evidence facilitate improved driver, that promotes a safety-first culture.
Automated Claims Processing
One of the strongest impacts of AI in auto insurance is the automation of claims processing. AI-enabled claims management can reduce claims processing time by up to 70% and lower the cost of claims handling by 30%. Remote and automatic damage assessment allows for quicker settlements, significantly improving the customer experience. AI can analyse images of vehicle damage, verify claims, assess repair costs, and even approve payouts within minutes, with minimal human intervention. This not only speeds up the claims process but also reduces the potential for human error.
Fraud Detection and Prevention
The Insurance Regulatory and Development Authority of India (IRDAI) estimates that fraudulent claims account for about 10-15% of the total claims made each year. AI acts as a powerful tool to detect fraud by identifying suspicious patterns and anomalies in claims data, that may indicate fraud and flag these for further investigation. This proactive approach not only protects insurers from financial losses but also ensures genuine claimants are served efficiently.
Strategic Partnerships for Successful AI Adoption
While AI promises numerous benefits, its integration is not without challenges. To fully harness the potential of AI, collaborations between insurers, tech companies, and regulatory bodies are essential. These partnerships can ensure AI solutions that are robust, compliant, and beneficial to all stakeholders.
In a competitive landscape, insurers adopting AI-driven solutions can deliver unparalleled value to their customers. Insurers can boost customer satisfaction by providing personalized policies and quicker claims processing. AI efficiencies lower operational costs, and reduced premiums for customers. And AI insights help drivers avoid risky situations and improve road safety. The future of auto insurance in India is all set to be driven by AI, promising a safer, more transparent, and inclusive ecosystem for all.
Rohan Malhotra is the CEO of Roadzen. Views expressed are his own.