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AI saves Old Mutual Insurance Sh400m in fraud and costs
Kenyan insurers have been automating their process to appeal to customers, especially the younger generations that are seeking fully-digital and personalised insurance products.
Old Mutual General Insurance says its investment in artificial intelligence (AI) helped save about Sh400 million last year by streamlining routine tasks and flagging fictitious claims, pointing to the increasing adoption of automation in the industry.
The insurer explained that using AI has allowed it to cut paperwork in the claims management process, lowering operational costs and improving fraud detection by analysing patterns in the usually data-heavy claim forms.
“We are relying on AI to reduce areas of revenue leakages and also detect fraud patterns that were initially difficult to catch. Last year, we saw a saving of almost Sh400 million that is directly attributed to AI tools adjudication,” said Japheth Ogalloh, managing director of Old Mutual General Insurance in an interview.
“The savings was a mix of the efficiencies we got in our processes as well as the fraudulent claims that were detected along the value chain. The AI use also improved customer experience and engagement by supporting a quicker claims management process.”
Old Mutual’s AI-related savings came in the year the general insurer cut its insurance service expenses to Sh16.69 billion from Sh16.81 billion spent in the previous year. The reduction bucked the industry trend where many insurers were posting a rise in service expenses as claims and claims servicing costs rose.
AI-powered analytics are able to sift through huge amounts of data to identify anomalies and flag suspicious patterns, helping insurers prevent fraud before losses occur.
Old Mutual General Insurance becomes the latest insurer to disclose the use of AI in claims management in an industry where customers frequently complain of delays in settlements even as players say up to 30 percent of claims are fraudulent and require detailed scrutiny.
Other insurers who have previously disclosed the use of AI in their businesses include Jubilee Holdings, Britam Group, APA and Sanlam Allianz.
Many insurers have been facing a delicate balance between weeding out fictitious claims and setting genuine ones on time to avoid eroding their profitability and driving up costs.
A McKinsey & Company report released last year said the best-in-class insurers on AI adoption are seeing 20 percent to 40 percent reductions in costs for onboarding new customers, along with up to five percent improvements in claims accuracy.
Kenyan insurers have been automating their process to appeal to customers, especially the younger generations that are seeking fully-digital and personalised insurance products.
The Association of Kenya Insurers (AKI) said last year AI has helped insurers in automating routine processes, enhancing fraud detection and customer engagement to ensure genuine claims are paid within 30 days.
The lobby said several insurers have introduced AI-powered chatbots that provide instant responses to customer queries. Insurers are also integrating machine learning and AI into actuarial modelling and fraud detection.
