13. The Effects of Artificial Intelligence on the Insurance Sector: Emergence, Applications, Challenges, and Opportunities

Like many sectors around the world (health care, manufacturing, transportation, customer service, banking, etc.), insurance sector has also started to adopt the artificial intelligence (AI) technologies to a large extent. With this adoption process, insurance companies can instantly respond to customer needs in the light of digital data and focus more on value-added areas. AI technologies also contribute to effective communication with customers, reduce costs, develop new products and services, and improve the competitive environment to prevent insurance companies from being indifferent to these technological developments. On the other side, these technologies identify potential risks in advance, inform the insured, and support them to take the required precautions. While this situation is supportive for the insured part, it may create a number of threats for insurance companies as it causes a decrease in insurance premiums. These threats are pushing insurance companies to go through a number of transformations in their business models to turn the disadvantaged situation in their favor. This being the case, addressing these innovations is of great importance not to fall behind these developments. From this point of view, this chapter explores the AI innovations and their effects on the insurance sector and reveals the use cases of global and Turkish insurance in the implementation of AI.