The insurance industry in Kenya is gradually shifting towards the new age of artificial intelligence (AI) technology in an attempt to improve their businesses.
With the emergence of concepts such as machine learning and generative AI (GenAI), insurers are leveraging technology to better gauge risks, combat fraud, and offer tailor-made pricing alongside a range of other applications.
In Kenya, Prudential Insurance is among the latest to hop on the bandwagon after partnering with Google Cloud last month to develop an AI lab designed to accelerate the underwriter’s adoption of machine learning and GenAI.
In a statement following the deal, Prudential said the lab will provide a sandbox environment and process for its employees to develop scalable AI products and applications, including access to leading language models, advanced and secure GenAI, data analytics and end-to-end cloud delivery.
Earlier in April this year, health insurance technology platform M-Tiba announced the integration of AI into its claims processing system, a development aimed at reducing the wait time for approvals to less than 12 hours.
The firm also aimed to use the technology, particularly machine learning models, to improve efficiency and arrest fraud, which it said would reduce administrative and medical costs for health insurance providers, ultimately helping them to offer more affordable insurance products to their clients.
This came months after Jubilee Insurance announced in June last year that it had lined up Sh2.25 billion to be expended on digital transformation, including investing in robotics, AI, and data analytics as it sought to roll out customised covers and improve service delivery.
But how exactly does the use of AI smoothen up insurance operations?
Apollo Group CEO Ashok Shah, in a column published in the Business Daily in March, said that AI is increasingly becoming a powerful tool in the fight against insurance fraud, which has bedevilled the sector for years as policyholders try to cash in on dishonest claims.
“Through advanced analytics and pattern recognition, machine learning algorithms can identify anomalies and irregularities in claims data. This not only helps prevent fraudulent claims but also streamlines the claims process for genuine policyholders,” he stated.
“By reducing fraudulent activities, insurers can enhance their profitability and maintain more competitive premium rates,” Mr Shah added.
His sentiments are echoed by Chrisantus Khulabe, the senior manager, data analytics and digital forensics at PwC Kenya, who says that automated system controls integrated with other third-party systems can help detect fictitious claims by comparing claims data with other sources such as historical data, policy information and public records from regulators and other institutions to identify inconsistencies.
“Automated systems can collect multiple data points and help in detecting staged accidents or intentional injuries by analysing claim data against factors such as location, type of damage, medical reports, unique motor features as well as the number of passengers involved to identify any suspicious patterns,” said Mr Khulabe in acolumn in the Business Daily in June.
In addition to curbing fraud, as Fred Ruoro, CIC General Insurance managing director, notes, embracing digitisation will present insurers with a huge capacity to reach previously underserved or untapped markets.
With AI’s ability to analyse vast amounts of data from multiple sources, insurers can now make data-driven decisions in real-time which would, in turn, enable them to develop personalised insurance offerings that cater for the unique needs and risks faced by local policyholders.
“By harnessing technology, insurance companies can extend their reach to everyone from urban to remote areas and offer micro-insurance products tailored for people in the low-income bracket,” observes MrRuoro in a commentary.
However, for technology and the attendant digitisation efforts to bear the intended outcome in the sector, Mr Ruoro says it will require a concerted effort from all stakeholders, arguing that insurance companies must be willing to invest in technology infrastructure and talent development to build the capabilities necessary to drive the transformation.
“Collaboration between underwriters and industry players is essential to foster innovation and drive the adoption of new technologies, this will create an enabling environment to not only increase the uptake of insurance solutions, but also enhance efficiency which will benefit entities within the ecosystem,” he added.
