From eerily realistic deepfake images on social media. To Apple announcing its partnership with OpenAI. Barely a week goes by without an AI-related story hitting the headlines.
But the insurance industry tends to be reluctant to adopt new technology, and AI is no exception. Perhaps the biggest news story about AI in insurance was in 2023 when Lemonade used AI to process a claim in record time (just 2 seconds). Yet despite this promising demonstration, AI hasn’t become a common tool in insurance.
When it comes to travel insurance in particular, are we likely to see AI technology anytime soon? How could it benefit insurers and consumers? And what kind of claims could we trust AI to deal with? Read on to find out.
Could AI help during the application process?
Travel insurance already has a fairly straightforward application process. Especially when you compare it to car and life insurance.
Most applicants just need to enter their destination, travel dates, and a few personal details. This process is typically far quicker and requires less guesswork than other insurance products, like car insurance. For example, you don’t have to think about how many miles you might drive this year.
The purchase process for travel insurance also seems to be more positive for consumers. Unlike car insurance, which is legally required, most people don’t view travel insurance as a grudge purchase. AllClear found that 32% of consumers arrange travel insurance as soon as they’ve booked their travel plans. So it’s something people are happy to prioritise.
The price of travel insurance is also far more palatable. Our data shows that the average costs of car insurance have increased by 44% for women and 43% for men. As a result, consumer trust in car insurance has never been lower. And while travel insurance has gotten more expensive, it hasn’t jumped up nearly as much as car insurance. According to stats from Finder, 87% of consumers were satisfied with their travel insurance policy in 2023.
Travel insurance tends to be simpler and more positive for more customers. But, it’s far from perfect – especially for those with complex health needs.
At Confused.com, we’re confident that people with significant health challenges can find suitable travel insurance plans. However, I think that AI could significantly improve the application process for people with complex health conditions.
How an AI chatbot might help those with complex health needs apply for travel insurance
Currently, consumers enter their medical information on the travel insurance application form. The form adjusts based on the medical conditions they disclose.
For example, if you say that you have diabetes, the form will ask whether you manage it with insulin and if you have any related conditions. These questions are essential for insurance providers to create accurate risk assessments. And for consumers to get the coverage they need.
However, this process can be confusing for some customers. They might not understand the question, and end up giving incorrect – or not enough – information. AI could streamline this process. Imagine Sarah, a travel insurance customer who has recently been diagnosed with diabetes. She starts her application, but hits a snag with some of the medical questions.
With an AI chatbot built into the application, Sarah can get immediate help. She asks, "What does 'medication-managed diabetes' mean?" The chatbot quickly explains that it means diabetes controlled mainly through medication, such as insulin. This helps Sarah accurately fill out her form.
The chatbot can also give tailored advice and collect even more valuable data. For example, after Sarah enters her diabetes, the chatbot might suggest, "You should also mention related conditions." For example, hypertension or kidney disease. Do these apply to you?" This guided help makes the process smoother for Sarah. It ensures the insurer fully understands her health.
Of course, not everyone will want to use a chatbot, even those with complex health needs. But by offering it as an optional feature, travel insurers and price comparison websites (PCWs) can improve data accuracy, quality, and customer satisfaction.
Could an AI-powered travel insurance app be useful for travellers?
Most people view travel insurance as a peace of mind purchase. But they rarely interact with it beyond the application process.
While many insurers already offer apps with useful information about policies and travel locations, engagement is somewhat limited. This isn’t necessarily a problem, as insurers realise that people want to enjoy their holiday without thinking about what could go wrong.
However, we could soon see travel insurers using artificial intelligence to improve their apps. This could be as simple as offering timely advice for various travel-related queries, such as delays or traffic conditions. But I don’t think this is the most exciting use of AI, as other apps, such as the airline’s own app and Google Maps, already do this.
The main benefit of AI in a travel insurance app is that the consumer can ask specific questions about their policy.
Imagine a policyholder who gets injured on holiday and wonders, "Where is the nearest hospital that accepts my insurance?" While they can phone their insurer, this has unnecessary friction. They might have to wait on hold at a call centre and could be passed to multiple agents. An AI chatbot could offer quick and accurate responses based on their exact policy in seconds.
If luggage is lost, customers could turn to their insurer’s app. Instead of navigating through various airline customer service channels and typing, “I’ve lost my luggage. What should I do?" The AI would instantly recognise that the airline, rather than the insurer, usually handles this issue. They could then guide the policyholder on contacting the airline’s lost and found and suggest steps for filing a claim with the airline.
It could inform the traveller about any compensation or assistance their travel insurance might offer in such cases. The AI could authorise a transfer of funds to purchase essentials (clothes, toiletries and so on).
The chatbot could offer the consumer an immediate answer and save the insurer resources from answering simple queries. As a result, this would reduce operational costs for the insurer and could lead to lower premiums for all customers.
How an AI-powered app could help policyholders during a climate crisis
One instance where an AI chatbot built into an app could be crucial is during a climate crisis. Perhaps the most notable example in recent memory is the 2023 fire in Rhodes. Many customers struggled to reach service agents. This was due to the high call volume.
Having digital assistance readily available during this kind of event could be invaluable.
Imagine Emma and her family are on holiday in southern Europe, when a severe wildfire breaks out. The local authorities issue evacuation orders. Emma needs quick, reliable information on safety procedures. She also needs to know how her travel insurance can help during this crisis.
With an AI assistant integrated into her travel insurer's app, Emma could instantly access real-time updates and guidance. As soon as she opens the app, the AI alerts her: "We notice you're in Rhodes, where a wildfire has been reported. Click here for safety tips and evacuation routes."
The AI could then offer step-by-step customer support based on the information in Emma’s policy. For example, the AI chatbot might say, "Your policy includes coverage for emergency accommodation. Would you like me to book a hotel room for you and your family in a safe area?"
This digital tool provides key info quickly. It also eases pressure on support in busy times. By leveraging AI, insurers can ensure that every traveller has instant access to the help they need right from a device always at hand.
Read more about how climate change is impacting travel insurance.
Could insurers use AI to improve the speed of travel insurance claims?
The effectiveness of AI during the claims process largely depends on the type of claim.
AI and machine learning can significantly streamline the process for straightforward issues. like cancelled flights or lost baggage. These are relatively simple scenarios in which AI systems can quickly assess the situation and process claims without much human intervention.
For example, the AI can get the claims data it needs from the airline that lost the baggage, so there’s no back-and-forth with the policyholder.
AI can help by guiding policyholders through the initial steps of the claims process. For example, it can answer questions like "I know I have medical coverage, but can I use any hospital I want?" or "Is this treatment covered under my plan?"
It can also assist in instantly processing receipts and other documentation. The policyholder could simply send an image through the chat, which AI models like ChatGPT can now accommodate.
However, medical emergencies would be significantly more challenging for AI to deal with.
They can be complex and costly, often requiring specialised knowledge that varies from insurer to insurer. In its current state, insurers can’t trust that AI can handle complex medical claims. This is due to the nuanced decision-making that requires human expertise.
For instance, assessing a claim for a rare medical condition might involve evaluating unique patient histories. This includes specialist reports and changing treatment protocols. While AI will undoubtedly get there, I don’t see this happening anytime soon. Similarly, consumers might want a human voice on the other side of a phone, making them feel more comfortable and supported.
Still, AI can help process simple disruption claims, like lost luggage, and answer policyholder questions. This can free up more claims handlers to deal with complex medical claims.
For AI in travel insurance to take off, it has to reduce insurer’s costs
Travel insurance is already fairly efficient. But, AI could improve the customer experience even more.
However, an improved customer experience won’t be enough for insurers to justify the investment in AI. But if AI can speed up routine claims processing, it could cut insurers’ costs. That would lower the premiums for customers.
We could see AI employed first in other insurance sectors, such as car insurance, where the potential savings could be much higher. Once AI shows its cost-saving benefits in one insurance area, I predict it will quickly become common in all insurance. This includes travel insurance.
To stay up to date on how AI is impacting insurance, stick with Confused.com.
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