Artificial intelligence is no longer a thing of the future. Right now, machine learning is being used in various industries to help in many ways. A subset of artificial intelligence, machine learning is a way for computers to rapidly analyze large amounts of data and make predictions based on what the computers have learned. While this seems like something that would be beneficial in the tech industry, it’s actually incredibly useful in a variety of different situations, like determining risk levels for insurance companies.
How Machine Learning is Used for Insurance
Companies today are using machine learning for the insurance industry to help insurers calculate risk and write policies. When a policy is written, the amount of risk the insurance company takes on is taken into consideration, and that’s what helps determine the premium the customer will pay. A customer who is a higher risk is going to pay more, while one that is a lower risk will pay less for the same amount of insurance. Machine learning helps the buyer get better rates and the insurance company offer better deals to all of their clients, especially those who are considered low risk.
Impact of Machine Learning on Buyers
Depending on the type of insurance, there are numerous factors that go into calculating the premium. For the most part, these are general categories, like age, that might not take into account whether someone truly is a higher risk. Young male drivers, for instance, will likely have a higher insurance premium because statistically, they get into accidents more frequently. However, two young male drivers may actually have very different levels of risk. With machine learning to analyze data, it’s possible to determine which of those who are applying are a lower risk so they can be offered a lower premium.
Impact of Machine Learning on Insurers
Insurance companies strive to offer low rates to attract more customers. Machine learning can help this happen. Since machine learning allows for a better risk assessment of customers, it’s possible to offer lower rates to those who present a lower risk for the company. This makes the insurer more attractive to work with, which helps bring in a lot of new customers. It also makes determining the risk of potential customers far more accurate, so insurance companies are less likely to lose money when they do offer a policy to a customer.
Other Places that Use Machine Learning
The insurance industry isn’t the only area where machine learning is becoming more common. Today, hospitals are starting to use machine learning to read medical data and make better predictions about the care needed for patients. Retail companies are using machine learning to help with advertising and sales to increase profits. Online companies like Amazon are also using machine learning to help detect and prevent fraudulent transactions. By being able to spot and prevent potential credit card fraud, companies can save significant amounts of money on stolen merchandise.
Machine learning and artificial intelligence are no longer something to look forward to in the future. They’re being used today with amazing results to help across different industries, including insurance. Companies today can take advantage of machine learning for tasks that would otherwise be time-consuming or costly to do because it’s easier for the machines to rapidly read and analyze data.