AI in Insurance Market Size to Hit Around USD 79,860 Million by 2032

Ottawa, Aug. 03, 2023 (GLOBE NEWSWIRE) -- As per Precedence Research, the global artificial intelligence (AI) in insurance market size will reach at USD 45,110 million in 2030. AI in insurance refers to the application of artificial intelligence (AI) technologies and machine learning algorithms within the insurance industry to enhance various processes, decision-making, and customer experiences. AI in insurance enables insurers to analyze and interpret vast amounts of data, make predictions, and automate tasks that traditionally required human intervention. By leveraging AI, insurance companies can streamline operations, improve risk assessment, enhance underwriting processes, expedite claims handling, detect and prevent fraud, and offer personalized insurance products and pricing based on individual customer profiles.

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AI-driven chatbots and virtual assistants are also used to engage with customers, provide support, and improve overall customer service. AI in insurance plays a significant role in transforming the industry, making it more efficient, data-driven, and customer-centric. As AI technologies continue to advance, the scope and impact of AI in insurance are expected to grow, leading to further innovations and improvements in the insurance sector.

Regional Snapshot

North America is expected to hold a significant market share during the forecast period. The regional growth is attributed to numerous factors including partnership and collaboration, regulatory environment and presence of large market players. Insurers in North America are partnering with technology companies and AI solution providers to access cutting-edge AI technologies and expertise. These collaborations accelerate the development and implementation of AI solutions in the insurance industry. Moreover, the regulatory environment in North America has influenced the adoption of AI in insurance. Insurers must comply with data protection and privacy regulations while deploying AI technologies that involve customer data. Furthermore, many well-established insurance companies in North America have invested significantly in AI initiatives to stay competitive and address evolving customer demands. These large market players have the resources to implement and experiment with AI technologies across various aspects of their business, augmenting market growth.

Asia Pacific is expected to grow at the highest CAGR over the forecast period. The region has seen a surge in insurtech startups that leverage AI and other advanced technologies to disrupt the traditional insurance landscape. These startups offer innovative insurance products, distribution models, and customer engagement strategies that often rely heavily on AI. In addition, insurers in the region are using AI-powered chatbots and virtual assistants to improve customer engagement and offer round-the-clock support. These AI-driven conversational agents can handle customer inquiries, policy quotes, and other routine interactions, enhancing customer experience. Thereby, propelling the market expansion over the forecast period.

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Scope of this report

Report Highlights

• By offering, the software segment is expected to hold the largest share of the market during the forecast period. By automating fraud detection processes, software can save costs and protect insurers from financial losses due to fraudulent activities.
• By deployment, the cloud segment is expected to hold the largest share during the forecast period. These services include natural language processing (NLP), image and video analysis, speech recognition, and more. Insurers can integrate these AI services into their applications without the need for extensive AI expertise.
• By end user, the life and health insurance segment is expected to capture the largest market share over the forecast period. AI technologies, including machine learning algorithms, are used to analyze a wide range of data sources in the life and health insurance sectors. This data may include medical records, lifestyle data, genetic information, and more. AI-driven underwriting models help insurers assess risks more accurately, enabling them to tailor insurance products and set appropriate premiums based on individual health profiles.
• AI is employed to analyze health data and predict potential health risks. In the health insurance segment, this can help insurers encourage policyholders to take proactive measures to prevent or manage certain health conditions, ultimately reducing claims and healthcare costs. Thereby, driving the segment growth during the analysis period.
• By application, the fraud detection and credit analysis segment is expected to hold a substantial market share during the forecast period. Fraud detection is a critical aspect of the insurance industry, as fraudulent claims can result in significant financial losses. AI-powered fraud detection systems analyze vast amounts of data, including historical claims data, customer behavior patterns, and external data sources, to identify suspicious activities and potential fraud indicators. Additionally, AI-driven credit risk assessment models analyze an individual's credit history, payment behavior, and financial stability to determine their credit risk. This information helps insurers make informed decisions on financing options and credit terms. Thus, influencing segment growth.
• By organization size, the large enterprise segment is expected to hold the dominant share of the market during the forecast period. AI systems can provide personalized recommendations, answer customer queries, and assist with policy-related inquiries, leading to improved customer engagement and satisfaction for large-scale organization.

Market Dynamics

Driver

Cost efficiency and automation

Insurance companies face significant operational challenges, including manual and time-consuming processes. AI technologies, such as robotic process automation and natural language processing, offer automation of repetitive tasks, leading to increased operational efficiency and cost savings. Automation reduces human errors, accelerates processes like claims handling, underwriting, and policy administration, and allows employees to focus on more complex and strategic tasks. Therefore, the cost efficiency and automation benefits provided by AI are expected to propel the market expansion during the projected period.

Restraint

Lack of skilled workforce

The successful implementation of AI technologies requires a skilled and knowledgeable workforce capable of developing, managing, and interpreting AI models. The demand for AI talent often outpaces the available supply, making it challenging for some insurance companies to find the right expertise to drive their AI initiatives effectively. Thus, the lack of a skilled workforce is expected to hamper the industry growth over the projected period.

Opportunity

Enhanced customer experience

AI-driven chatbots and virtual assistants have transformed customer service in the insurance industry. These intelligent systems can provide real-time support and personalized responses, improving customer engagement and satisfaction. Additionally, AI enables insurers to offer tailor-made insurance products and pricing based on individual customer profiles, leading to a more customer-centric approach. Thus, the enhanced customer experience is expected to offer an attractive opportunity for market growth during the analysis period.

Challenge

Explainability and transparency issues

AI algorithms, particularly those based on deep learning and neural networks, can be complex and challenging to interpret. The lack of transparency and explainability in AI decision-making processes can raise concerns among regulators, customers, and even within the insurance companies themselves. In highly regulated industries like insurance, explainable AI is essential to build trust and comply with regulatory requirements. Thus, this is expected to act as a major challenge for the market growth over the forecast period.

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Recent Development

• In April 2022, CLARA Analytics introduced CLARA Optics, a software application that combines AI and machine learning to scan, organize, and analyze invoices and medical papers to produce a claim-based medical record and contributes to the commercial insurance industry's usage of artificial intelligence technology.
  
  

Market Segmentation

By Offering

• Hardware
• Software
• Services
  
  

By Deployment Mode

• On-premise
• Cloud

By Technology

• Machine Learning
• Natural Language Processing
• Computer Vision
• Others

By Organization Size

• Large Enterprises
• SMEs

By End User

• Life and Health Insurance
• Property and Casualty Insurance

By Application

• Fraud Detection and Credit Analysis
• Customer Profiling and Segmentation
• Product and Policy Design
• Underwriting and Claims Assessment

By Geography

• North America
• Europe
• Asia-Pacific
• Latin America
• Middle East and Africa
  
  

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