Auto insurance

New rules could open floodgates for AI-powered car insurance

NEW DELHI: Artificial intelligence (AI) is poised to transform the auto insurance industry in India, with car sellers and insurers offering AI-powered solutions for policy renewals.

For example, Kotak General Insurance Co. Ltd has started using an AI-based vehicle pre-inspection tool in partnership with Inspektlabs for policy renewals.

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

The company announced its plans two weeks after India’s Insurance Regulatory and Development Authority (Irdai) cleared general insurance companies to start using technology solutions for their own casualty covers.

Suresh Sankaranarayanan, chief technology officer of Kotak, said the regulator’s decision will pave the way for AI-based solutions in auto insurance. However, for Kotak, the plan had been in the works for some time, he added.

Irdai has also asked insurers to offer telematics-based insurance plans such as “Pay As You Drive”, in which the premium amount is calculated based on the number of kilometers driven by a vehicle, and “Pay How You Drive”, where he is determined. by driver behavior.

Sankaranarayanan said Irdai’s decision will encourage insurance companies to come up with various plans. “We are also working on something along the same lines and will release it soon. “Insurance is a paper-intensive business, whether it’s onboarding or claims. We’ve digitized documents, but digitization only reduces transport time. Using AI reduces the processing system for a few hours,” he added.

It will also make claims processing much faster and will also help identify markers of fraud more efficiently, Sankaranarayanan said.

Admittedly, AI-based insurance is nothing new. Used car dealers are also using such solutions or considering doing so. For example, the used car platform CARS24 uses neural network architectures along with traditional imaging and sound processing techniques to detect damage and defects in car exteriors as well as engines. “We were able to reduce inspection times by 20%. Our sales margin has improved by 5% of the sale price over the past six months,” said Naresh Mehta, Head of Data Science and Analytics (Global) at CARS24.

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

Similarly, used car showroom CarzSo also plans to deploy an AI-based solution during and after inspection to rate vehicles based on their condition.

“Dealers and used car buyers find it difficult to assess the condition of a used car,” said Vaibhav Sharma, Founder and Managing Director of CarzSo.

However, CarzSo does not use AI to insure vehicles, but the core technology is similar. In fact, industry experts have said that as more insurance use cases arise, companies offering AI products will gain in authenticity.

That said, the increased use of AI could also be detrimental to end users. Biases in AI models and poorly constructed algorithms could penalize users when they shouldn’t, or overlook road and driving conditions in countries like India.

Insurers are also aware of these concerns. “No model is perfect, to begin with. It will reject a few cases through no fault of the user,” Sankaranarayanan said, adding that the company refines the model to remove errors or biases.

“Over time, the model will refine to such a degree that it may no longer be the predominant problem.”

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