Reimagining the Future of Insurance: Strategic Integration of AI and ML

There has been a significant change in the Indian Insurance Industry with the use of new disruptive technologies like Artificial Intelligence (AI) and Machine Learning (ML). Previously everything used to run on paperwork & phone calls resulting in long waiting time. Insurance companies these days are utilising these technologies for betterment of customer and their operations. AI & ML can be used for transforming traditional practices, from claim & underwriting processing to customer service and fraud detection.

Making Underwriting and Claims Processing Easier

In the past, underwriting was a long and tiring process. People had to fill out piles of forms. Staff would go through each document, one by one. Errors were common, and delays were almost guaranteed. But now this is not the case.

Now, with AI tools, a lot of these tasks happen automatically. Systems can read data, scan medical reports, and check for important details in seconds. This makes it easier for underwriters to make decisions that are both quick and accurate.

One great example is the use of video medical exams—what some call VideoMER. These are live video checkups that collect health information on the spot. It saves time for both customers and insurance staff. Plus, it reduces the chances of mistakes or missing important information.

Also read: From Access to Empowerment: How BFSI Players Are Rethinking Rural Finance

That’s just the beginning. AI and ML are not just improving speed—they’re making the whole experience more accurate and more customer-friendly. AI tools also turn complex medical details into simple visual reports, making it easier for insurers to understand the customer’s health.

Claims processing is seeing a revolution too. AI systems can read hospital bills using tools like OCR (Optical Character Recognition). In case of motor insurance, AI can even “look” at photos of a damaged vehicle and estimate the repair cost using image recognition. All of this reduces waiting time and errors. As a result, customers are getting their claims settled faster, and companies are building more trust.

Customer Service that Works Around the Clock

Have you ever spoken to a chatbot on an insurance website? That’s AI in action. These chatbots are always available—day or night. They can help you get a quote, answer questions, or guide you through making a claim.

But AI does more than just talk. It remembers what you asked last time, what kind of policy you have, and what you might need next. Based on this, it can suggest better options. It’s like having a smart assistant who knows you well—and never sleeps.

Enhancing Insurers operational Efficiency

Insurance companies deal with huge amounts of paperwork and information. Many routine tasks like document sorting insurance documents, data entry and report generation can be done automatically by use of AI resulting in quick decision making. With this employee are free & can focus on strategic roles.

Insurance Fraud Prevention

Insurance fraud is a serious problem, and it’s costing companies around the world a lot of money—close to $40 billion every year. But now, technology is helping insurers fight back.

Advanced ML models identify suspicious claims in real time, allowing insurers to intervene before losses mount. AI tools can look at thousands of cases and spot when something looks off. For example, if a hospital bill is much higher than usual for a simple treatment, or a car crash claim doesn’t match the photos, the system raises a red flag. This allows companies to stop the fraud early, saving a lot of money.

Also read: 5 Trends that will Shape Wealth Management Industry in India Ahead

Understanding Risk Better with AI

One of the main jobs of an insurer is to understand risk. Who is likely to make a claim? How much could that claim cost? The AI helps answer these questions. By looking at things like where someone lives, their health history, or how they drive, AI can make pretty good guesses. It helps the insurer offer prices that match the actual risk. This makes it fairer for customers too. People who are less risky don’t have to overpay.

Playing by the Rules

With all this data flying around, there’s also a need to stay careful. AI systems collect a lot of personal information. So, it’s important for insurers to protect it. Insurance companies must gain explicit customer consent and ensure data usage is transparent. 

In India, Insurance Regulatory and Development Authority of India (IRDAI) guidelines and framework like the Digital Personal Data Protection Act are already in place to make sure companies use data responsibly. 

Also, AI systems must be fair. They shouldn’t make choices that are biased based on someone’s underwriting or claims decisions. This is where ethics matter. 

Challenges in adoption

Bringing in AI isn’t simple. Many insurance firms still work with outdated systems. They might not have enough skilled workers or the latest tech. But this doesn’t mean they can’t start.

The smart way is to start small. Use AI for just one part of the job—like checking claims. Train your team. Learn as you go. Bit by bit, the whole system gets better.

The Road Ahead

Soon, we’ll see more updated real-time tools—like wearable devices that send health updates or cars that share driving info. This will help insurers offer more personal, accurate plans. AI might even tell you when your policy is about to end or suggest better options based on your life.

Conclusion

AI and ML are more than just tech buzzwords. They are quietly rewriting how insurance works in India. The companies that use them wisely—and ethically—will move ahead. The future is already here. And it’s powered by smart, thoughtful technology.

Prof Pratik Priyadarshi and Dr Sunil Kadyan are Associate Professors at Birla Institute of Management Technology (BIMTECH).