Australian insurer uses AI for car accident claims

Laveta Brigham

Insurance Australia Group (IAG), selling insurance under brands such as NRMA, CGU, and SGIO, has announced implementing artificial intelligence (AI) into its claims process. Through AI, IAG is predicting whether a motor vehicle is a total loss after a car accident, which it touts can remove the need for a […]

Insurance Australia Group (IAG), selling insurance under brands such as NRMA, CGU, and SGIO, has announced implementing artificial intelligence (AI) into its claims process.

Through AI, IAG is predicting whether a motor vehicle is a total loss after a car accident, which it touts can remove the need for a vehicle to be towed to a repairer prior to being assessed as a total loss.

The tech combines AI with automation. IAG said the use of AI has reduced insurance claims processing times from over three weeks to a few days.

IAG director of analytics Hannah Sakai said predictive total loss, which was developed in-house, was created to help reduce the emotional impact of a car accident by providing customers with more clarity and certainty sooner in the claims experience.

“A car accident can be a traumatic and challenging time for our customers, so we turned to artificial intelligence to help improve this experience,” she said.

“Our predictive total loss solution leverages machine learning to detect a potential total loss with more than 90% accuracy, using information provided by the customer when they make a claim on the phone with a consultant or online.”

Sakai said the customer is notified of the potential total loss outcome via text message the following day.

She also said the predictive total loss model is one of many AI applications being developed by the company’s in-house data scientists, out of its AI Centre of Excellence. 

“Using an internal team allows us to leverage our unique business knowledge to tailor the experience to our customers,” Sakai added.

IAG said predictive total loss was evaluated using the Australian government’s voluntary AI ethics principles to identify potential issues or risks prior to go-live.

The federal government in November 2019 published the eight AI principles that were developed as part of the national AI ethics framework to ensure the principles can be translated into real world scenarios. 

“We need to make sure we’re working with the business community as AI becomes more prevalent and these principles encourage organisations to strive for the best outcomes for Australia and to practice the highest standards of ethical business,” Minister for Industry, Science and Technology Karen Andrews said at the time.

“This is essential, as we build Australians’ trust that AI systems are safe, secure, reliable and will have a positive effect on their lives.”

At launch, National Australia Bank, Commonwealth Bank, Telstra, Microsoft, and Flamingo AI put their hands up to be the first businesses to test run the principles.

“The IAG AI Centre of Excellence plans to refine the model using customer photos of the vehicle damage and extending the methodology to predict motor claim liability to help automatically validate claims at the time of customer lodgement,” IAG added.

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