A Comprehensive Report on the Effect of AI on the Insurance Industry

This report investigates the impact of artificial intelligence (AI) on the insurance industry, focusing on how AI is reshaping customer interactions, streamlining operations, and enhancing fraud detection. It addresses the frustrations associated with traditional insurance processes, such as manual policy purchasing and claim reporting, and explores how AI-driven solutions offer personalized and efficient alternatives. The research aims to understand AI's role in risk assessment, premium pricing, and overall industry transformation. Through qualitative research methods, including interviews and observations at Chevalier Insurance Company Limited in Hong Kong, the study examines AI's potential to reduce human error, automate claims processing, and improve customer service, ultimately providing insights into the future of AI in the insurance sector and its benefits for both insurers and consumers. The report concludes with recommendations for insurance companies to leverage AI for enhanced efficiency and market relevance.

Running Head: EFFECT OF AI ON INSURANCE INDUSTRY 1
EFFECT OF AI ON INSURANCE INDUSTRY
AURTHOR NAME
UNIVERSITY OF AFFILIATION

EFFECT OF AI ON INSURANCE INDUSTRY 2
Executive summary
Purchasing of a general and life insurance policy online it is not that easy to picture. Reporting of acclaim
through a digital device such as mobile app and later receiving payment through a digital method, is
possible. Suppose the process was very seamless would the consumer have preferred not having
talked to anyone during this process? In the insurance industry, the artificial intelligence has
begun making the customer journey very possible through bringing a paradigm, shift in the way
consumers transact insurance and think of insurance. This study looks at the effect that artificial
intelligence has produced in the insurance industry.

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Table of contents
Executive summary.....................................................................................................................................2
Table of contents.........................................................................................................................................3
1.0 Introduction...........................................................................................................................................4
1.1Background............................................................................................................................................4
1.3Problem statement..........................................................................................................................4
1.4 Research Aims...................................................................................................................................5
1.5 Research Objectives..........................................................................................................................5
1.6 Research questions............................................................................................................................5
1.7 Research rationale..............................................................................................................................6
2.0 Research methodology.......................................................................................................................6
2.1 approach........................................................................................................................................6
2.2 Sample place..................................................................................................................................6
2.3 Study population............................................................................................................................7
2.4Study period....................................................................................................................................7
2.5Data collection................................................................................................................................7
Interview..........................................................................................................................................7
Observational...................................................................................................................................8
2.7Data analysis techniques.................................................................................................................8
2.8Plan for interpretation of the research result...................................................................................8
Results.....................................................................................................................................................9
Discussion...............................................................................................................................................9
Conclusion...............................................................................................................................................9
References.............................................................................................................................................10

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1.0 Introduction
Artificial intelligence is the integration of the human intelligence processes by machines, mostly
computers systems. These processes comprise of the learning and reasoning and correction that
are self-made. Artificial intelligence has been integrated into business and applies to the task that
is highly repetitive which are performed by the people. The machine learning algorithms have
been incorporated into the CRM platforms and analytics so that the information can be
uncovered on ways of enhancing the consumer service.There has been an incorporation of the
chat function in the insurance websites so that consumers can receive a rapid service.
1.1Background
The insurance industry is taking significant advantage of the artificial intelligence. Majority of
the consumer inquiry or communication are automatically placed following a particular type of
the event. The artificial intelligence enables the transfer of the more significant data sets from
one system to the other system(Harris, 2016).. The transmission can be on internal insurance
system or between third parties and the insurers such as network repairers or the brokers
(Morgan, 2012). Through the integration of the insurance and artificial intelligence, a simple task
can be rapidly done and in an accurate manner.(Brooks,2013). Insurance companies can process
significant data volumes. The data provided can be used in the analysis of the information and
insight that are useful.
The data that the insurers do have is both a blessing and a curse (Datafloq.com, 2015). Mining
data can be complicated for information that is meaningful and new. However, the crunching of
the members of the datasets that are massive require some necessary computing power and has to
be managed carefully to generate valuable learning(Insurance,2012). Use of the data analytics
lets the insurer understand the risk more carefully. It makes it easier for the analytics to have a
keen eye in spotting the trend which can lead to the accurate pricing and give advice on the better
risk management (Rouse, 2012).This can help identify the fraud activity taking place.
1.3Problem statement
The more significant percentage of the insurance consumer industry is more frustrated with the
manual purchasing of the insurance policy cover, claim to report and to receive payment.
Consumers have a different work schedule, and during the scenario of claim reporting, they
might not be able to find time due to their busy schedule. This has led to a significant

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misunderstanding between the insurer and the insured. However, consumers would like to have a
personalized solution to this problem. Artificial intelligence is making this possible for the
insurance industry in various ways(The Telegraph, 2015). Artificial intelligence is bringing an
improvement in the way consumers are interacting with insurance companies. Artificial
intelligence is affecting the insurance industry in an appositive way since the majority of the
insurance agencies are looking for ways of optimizing their operations, so that they can retain
customer loyalty through addressing their issues such as faster claim report and consumer
interaction streamlining.
1.4 Research Aims
The insurance industry has over the years resistant to change. However, the company is forced to
undergo a digital revolution if it wants to stay relevant in the market. With the growth of the
artificial intelligence, the underwriter in the organization is now bringing a lot of information
that is to assess the risk and offer a premium pricing that is more tailor-made. The research looks
into the importance and the shift brought by artificial intelligence in the insurance industry and
its impact on the consumers.
1.5 Research Objectives
The objective of this research comprises of the following;
The impact that artificial intelligence will have on the insurance industry.
Use of artificial intelligence in fraud detection
Use of the artificial intelligence in the reducing the human error
The future of the artificial intelligence in the insurance industry.
1.6 Research questions
How will artificial intelligence reduce human error?
What is the future of insurance when there is the incorporation of artificial intelligence?
How can artificial intelligence be used in fraud detection?
What is the effect of artificial intelligence on the insurance industry?

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1.7 Research rationale
The insurance agency is well known for its outdated methods of processes. The same procedure
for filing a claim has been used over the years because the industry is not taking advantage of the
innovation in the market which is made available to them(Sennaar, 2014).. Suppose the
employee responsible for a claim is not around or busy; the claim report has to wait until the
person who is in charge is back. This brings a lot of frustration to the customer.However the
solution to this can be solved by the integration of the artificial intelligence in the insurance
industry, majorly in the claim process. The current claim process in the insurance requires the
intervention of human beings (Beauchamp, 2010). However, the artificial intelligence claim
process does not require human being intervention. The method makes use of the artificial
intelligence other technologies to operations the claim, audit the system, capture the damage and
communicate with the consumer(Uzialko, 2012).
2.0 Research methodology
2.1 approach
The approach adopted for this research is a qualitative method. This is because the technique is
inductive implying that the researcher can deduce meaning patter based on the data that has been
collected (Atieno,2009). This approach takes the researcher from specific conclusion to a general
conclusion. However, the majority of the research being undertaken have a deductive reasoning
degree up to a certain level. This approach does not base its research on a particular
predetermined hypothesis, never the less, it identifies the topic under study that the researcher
would like to explore (Mugenda, 2009). Despite this approach being methodical, it allows the
flexibility that is greater than the quantitative research ( Alzheimer-europe.org,2016). The
method of data collection used is interaction and observation with the people under study. The
data gathered is converted into the form that is numerical and analyzed statistically.
2.2 Sample place
The research will be conducted in Chevalier insurance company limited located in Hong Kong,
Chevalier insurance company is one of the best insurers of property and casualty in honking
(Chevalier.com, 2015). The company has a process for underwriting the various range of
business Insurance. The Company is the leading company in engineering insurance.(Hwang and

EFFECT OF AI ON INSURANCE INDUSTRY 7
Greenford,2005). The organization has its branches in China at Beijing where it has expanded its
portfolio.
2.3 Study population
The research approach used will comprise of the following data collection methods; Interviews,
observation, and questionnaires. The interview sample size will be 18:6 financial advisor, four
undwerwriter.2 unit manager, one claim officer, five customers. The poll will be handed out to
the five employees of the organization, three stakeholders, and eight customers. The survey will
be handed out through various mediums such as email and on the organization portal. The
sample population for the research will be 34 people in total.
2.4Study period
Task Period
Introduction 3 days
Problem statement identification 7 days
Research aim ,objectives 7 days
Research rational 3 days
Data collection 14 days
Data analysis 14 days
Data presentation 8 days
Conclusion 2 days
Recommendation 3 days
2.5Data collection
The data for the research will be collected through the use of various methods. The methods for
data collection comprises of:
Interview
The interview can be carried out in any of these three forms, structured, unstructured and semi-
structured (Silverman, 2009). Structured interviews are administered verbally in questionnaire
form, whereby a list of the predetermined question is asked, with minimal variation and are
closed-ended hence does not permit additional explanation.

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Questionnaire method is a convenient method of data collection if the information is to be
gathered from a diverse population. It comprises of a set of question which is related to the
research problem. This questionnaire is typically printed set of questions, open-ended or closed-
ended, whereby the respondent is required to give feedback based on their experience and
knowledge on the topic under study (Britten, 2013). Based on the subject under research, the
researcher will give out a questionnaire on a various medium such as internet, mail and hand
delivery so that the data collected can be from multiple employees and management in the
insurance industry.
Observational
Observation is a primary data collection method in which the investigator collects data based on
their observation from a personal point of view (Mba-lectures.com, 2016).In the case of the
research under study, the researcher wants to gather information about the effect of the artificial
intelligence in the insurance industry (Petroni,2012). For this purpose, the researcher has to
interact with the employee and customers to observe the paradigm shift brought by the artificial
intelligence in the insurance industry.
2.7Data analysis techniques
The technique that will be used for data analysis comprises of the content analysis technique.
The content analysis has three approaches which consist of the conventional summative and
directed (Hennik et al, 2010). The three methods are used in the interpretation of the meaning of
the content of the text data, therefore adhering to the paradigm that is naturalistic (Hewit, 2009).
Summative approaches, make of the comparison and number counting followed by the
interpretation of the context that is underlying. The conventional method of analysis categories
of coding is directly derived from the text data (Shujie et al.2007)
.
2.8Plan for interpretation of the research result.
The following procedure will be used in the interpretation of the research result.
The interpretation of the research goals. The first step will be the analysis and understanding of
the research goals (Herschel and Jones, 2005). That was the reason behind researching the effect
of the artificial intelligence on the insurance industry .This will aid in the data organization and
place focus on the data analysis.

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Interpretation and analysis of the qualitative information (Managementhelp.org, 2014). The
researcher has to read through all the data gathered during the data collection. The data has to be
organized into categories such as suggestion, the similarity of experience and recommendation
Information interpretation. Finally the researcher, has to make an informed argument (Hillman et
al.2015). That is the researcher has to put all the information in respective categories. The
researcher will then check on the recommendation provided, in order to help the insurance
industry improve on its process so that it can remain relevant in the market. The record of the
conclusion of the research and its recommendation in a report ready for the presentation.
Results
The results of the research will be presented in various forms such as bar graphs,gnart charts, pie
chart and PowerPoint presentation(Onwuegbuzie,2012). The result will also be displayed in a
journal from and posted online to help others in the industry as they decide on the adoption of the
artificial intelligence.
Discussion
Upon completion of the research, the researchers will be able to discuss on various data gathered
and came up with a solution and recommendation. The researcher's discussion can result in a
union agreement or an agreement that is of distinct recommendation hence providing a chance
for further research to be carried out.
Conclusion
The innovation in the technology industry has generated a significant impact on the consumers,
insurer, and brokers. Artificial intelligence has created an avenue for the possibilities, and it's
upon the insurance industry to ensure that the options are efficiently mined.
The insurance industry is a very competitive field. Therefore strong marketing is vital for its
survival. Companies can embrace the use of artificial intelligence to automate all the processes
that cause delay and bring frustration to the customers. Artificial information is accurate as
compared to human beings.
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