How AI, data analytics is going to shape future of Insurance underwriting in India

By Bhargav Dasgupta – MD & CEO, ICICI Lombard GIC Ltd

Increased internet penetration and mobile data usage has made the world around us increasingly digital. Consumers today are leveraging UPI for digital payments, Alexa to turn on their favorite music and using Swiggy / Zomato for their dining needs. In this rapidly changing world, a predominantly physical-intensive industry such as insurance is also undergoing rapid transformation. Data analytics and new-age technologies such as Artificial Intelligence (AI) and Machine Learning (ML) are leading this change.

In recent years, the insurance industry has seen new types of risks emerging; be it pandemics, climate change or data protection and privacy. Even traditional risks are changing rapidly. In motor insurance, we are seeing connected cars generating significant amount of data.

ML algorithms are helping us understand driving behavior and risk a lot better. In the future of driverless cars, the risk will completely change from analyzing driving behavior to analyzing the performance of the AI software. As that happens, onboard sensors data and ecosystem data will enable insurers to provide a near real time pay as you drive insurance basis the routes that are being driven and the probability of an accident on the driven route.

On the health front, information from wearables and other devices is helping people in moving towards a healthier lifestyle. Sophisticated video-based AI solutions are helping consumers understand their health vitals and are providing key biomarkers for understanding risk. Advances in genetics and understanding of the human genome could pave way for extremely personalized underwriting. Individuals at higher risk of certain diseases could not only get appropriate cover for the same, but also work on reducing their premiums by maintaining a certain lifestyle.

In commercial lines insurance, physical property risk inspection is essential for underwriting and pricing of risk. Drones and satellites are now helping us in real-time inspection of this risk and AI algorithms are helping in understanding and segmenting this risk. In agriculture insurance, high resolution imagery, coupled with AI based insights, is helping in yield prediction and crop damage assessment.

As we continue to be a part of a rapidly changing world, underwriting strategies would need to adapt to using this real time data from connected ecosystems, along with historical data, to price risk. New skill sets will need to be acquired to understand and process this information and a culture of innovation and transformation will need to develop in this movement towards a foresight driven world of underwriting in insurance.