New rules could open the door for AI-powered auto insurance

For example, Kotak General Insurance Company Limited has started using AI-based vehicle retrospective tool in partnership with InspectLabs for policy renewal.

As part of the process, customers can capture photos and videos of vehicles and upload them to a cloud-based app. The AI-powered model generates an automated inspection report on the extent of damage within seconds to determine whether the vehicle should be insured.

The company announced its plans two weeks after the Insurance Regulatory and Development Authority of India (Irdai) allowed general insurers to start using tech-enabled solutions for own loss cover.

Kotak Chief Technology Officer Suresh Sankaranarayanan said the regulator’s move will pave the way for AI-powered solutions in auto insurance. However, this plan for Kotak was in the pipeline for quite some time.

IRDA has asked insurers to offer telematics-based insurance plans like ‘pay as you drive’, in which the premium amount is calculated based on the number of kilometers covered by the vehicle, and ‘pay how you drive’. drive’, where it is determined. from the behavior of the driver.

Sankaranarayanan said that this move of IRDA will encourage insurers to come out with various schemes. “We are also working on something along the same lines and will come up with it soon. “Insurance is a paper-intensive business, be it onboarding or claims. We are digitizing documents, but digitization only reduces the transportation time. Using AI takes a few hours out of the processing system.”

Sankaranarayanan said this would greatly speed up the claims process and also help in more effectively identifying traces of fraud.

To be sure, AI-powered insurance is not new. Second hand car vendors are also using such solutions, or are planning to. For example, the used car platform CARS24 uses traditional imaging and sound processing technology as well as neural network architecture to detect damages and defects in the exterior of the car as well as in the engines. “We have been able to reduce inspection turnaround times by 20%. Our trading margins have improved to 5% of the selling price in the last six months,” said Naresh Mehta, Head, Data Science & Analytics (Global) at CARS24.

In February, Kotak General Insurance signed an agreement with CARS24 Financial Services to enable the platform to extend motor insurance services to its consumers.

Similarly, CarzSo, showrooms of pre-owned cars, are also planning to deploy AI-based solutions during and after inspections for rating vehicles based on their condition.

Vaibhav Sharma, Founder and CEO, CarzSo said, “Pre-owned car dealers and buyers are finding it challenging to assess the condition of a pre-owned car.”

Although CarzSo is not using AI to insure vehicles, the core technology remains the same. In fact, industry experts said that companies offering AI products will gain more authenticity as more and more insurance use cases come along.

That said, the increased use of AI can also be harmful to the end users. Bias in AI models and poorly constructed algorithms can penalize users when they should not ignore road and driving conditions in countries like India.

Insurers are also aware of these concerns. “Initially no model is perfect. It’s going to dismiss some cases for no fault of the user,” Sankaranarayanan said, adding that the company is fine-tuning the model to remove errors or biases.

“Over time, the model will refine to an extent where this may no longer be a major problem.”

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