Insurance policy request or claim rejected? Blame the bot

So, signed for a neighbourhood gym with a friend as a New Year resolution but didn’t bother working out even a single day? Your gym trainer knows this. Now, even your insurance company does, thanks to its AI bots.

Indian insurance companies are now rapidly moving to automated processes for accepting applications or approving claims related to life, motor and health insurance. These processes use data analytics and artificial intelligence (AI) to recover details of your vehicle, fitness and past ailments.

For instance, since gyms are also slowly partnering with general insurers to offer wellness products to customers, the policyholders’ data is also shared. Using your fitness tracker or the biometric entry made into gyms, AI is able to find out how regular you are with workouts. Similarly, using IoT devices installed in cars, the insurer is able to find out how many kilometres the vehicle was driven, on what days, for how many hours and at what speed.

Okay, they get the data. So how does this affect you as a policyholder?

When you go for policy renewals or claim settlements, these AI bots refer to the tons of information collected over the course of the year to decide whether to accept your proposal and claims. So, if you are a diabetic and have not shown any improvement over the past 12 months in your lifestyle including regular exercises, chances are that your premiums will be significantly higher than the friend who kept his promise to hit the gym every week.

On one hand, this means good news because customers keeping their daily date with fitness or good drivers will be incentivised. But, those with bad driving records or poor fitness history will be saddled with higher premiums. You may file a motor own-damage claim for a vehicle repair but the AI bot will easily be able to find out that you were actually drunk-driving and were also handed a fine by the traffic police. The claim would be rejected in this case.

The same goes for life insurance as well. Based on your medical history and fitness information, any proposal to buy a new policy may even get auto rejected. You may be posting pictures of smoking marijuana or drinking alcohol on a daily basis on your social media profiles; the AI bot is tracking all of it. Here, you cannot technically blame the insurer because it is the AI bot that made the decision.

Insurers said that while it is too early for AI to completely replace human underwriters, the change has already begun. Simple retail policies and claims are now being automated to be handled by AI.

It is possible that in the next three-five years, everything from your eating/drinking patterns, sleep hours will be tracked by insurers using AI bots. We tend to leave our digital footprint everywhere. Insurers are merely using that information to price policies better and leave risky people out.