4 ways AI-powered data extraction is transforming the insurance industry

Insurance companies have always had to maintain a delicate balance of ensuring proper risk assessment and charging appropriate premiums to remain profitable. In the past, competition was largely between similar institutions with pressure on underwriting departments to work as efficiently and accurately as possible. Now the landscape has started to shift with the rise of fintech insurance companies.

These new tech-first insurance startups provide quotes to consumers in minutes or a few days, all through the convenience of online and mobile portals. They offer incredible speed to processing claims. Lemonade famously paid a claim within three seconds of submission.

Now, insurers have to do more than provide competitive rates to maintain their customer base — they also have to provide faster customer service. Traditional insurance providers don’t have the convenience of rebuilding from the ground up as a tech-first company. Instead, they need to make their processes as efficient as possible.

Automating data extraction is the key to speeding up risk assessment, claims processing, payment, and almost every other operation they carry out. AI can help with all of it.

What is data extraction?

In document processing, data extraction retrieves, organizes, and stores information in a central database for further use. Before the digitizing of the back office, this was done through manually entering data from paper forms. Now, optical character recognition (OCR) eliminates the need for most typing, if information even needs to be transferred from paper forms at all. From there, the only work that remains is manually labeling the data with categories such as name, address, incident, and others. Advancements in artificial intelligence are automating even this task.

How AI-powered data extraction helps insurance companies

When AI is used for data extraction, it doesn’t just improve the accuracy of data entry. It can correctly identify and label what type of data it’s extracting to help insurance providers process the information more quickly. These capabilities can have a profound impact on every area of operation, including these:

Claims processing

With AI, insurers can immediately match incoming claims to policyholder profiles. Properly trained algorithms use natural language processing to detect the reason for the claim and route it properly for further review.

This can expedite processes such as fraud detection and also speed up payment by eliminating unnecessary manual reviews. For example, if the claim filed is for a low dollar amount and no red flags are associated with the policyholder, the insurer could opt to automatically send payment without human input.

Underwriting

Insurers apply complicated calculations to assess the risk of every new applicant. AI can apply these calculations in a fraction of the time it takes humans.

Once done, the AI can notify human workers of any red flags that need a closer look and even include the reason. Advanced AI platforms with well-trained models can even confidently suggest appropriate premium amounts with minimal human oversight.

Policy management

Underwriting and claims processing take up the bulk of time and resources for insurance companies, but they also contend with incredible customer service demands. When customers move, they need to change details of their policy, such as their address and contact information. AI-powered data extraction can easily detect the intent of these request emails and automatically input the new information in the database.

Compliance

Following know your customer (KYC) regulations is already so complicated that it could not be managed without automated name-screening software. However, these programs can generate thousands of alerts per day for documents involving politically exposed people (PEP) that need manual review. With AI assisting data extraction, insurers can handle most of these reviews without the need for human oversight, saving dozens, if not hundreds of work hours per year.

Artificial intelligence has completely redefined benchmarks for productivity in data extraction. But streamlining this procedure positively impacts nearly every aspect of insurance companies. As AI becomes even more widely used, and better trained, expect it to transform the industry as a whole.