Historically, the insurance industry has often been seen as slow to adopt technology, particularly due to the very structure of its operations.
However, in recent years, insurers from all walks of life have invested massively in generative AI (artificial intelligence) technologies (GenAI) and set up dedicated teams. According to the European Insurance and Occupational Pensions Authority (EIOPA), AI is used by 50% of European insurance companies in property insurance and 24% in personal insurance. In addition, 30% and 39% of them also plan to use AI in the next three years, in the areas of property insurance and personal insurance, respectively.
Generative AI has the potential to transform a set of forward-looking outcomes that are critical to the development of the sector. Indeed, the latter faces increasing risks such as climate change, cybersecurity, rising customer expectations, such as personalized experiences and guarantees, not to mention pressure on profitability.
AI applied to systems, a major asset for insurance companies
AI systems have many benefits that help companies personalize their products through refined data, overall cost reduction and increased revenue, which is the main return on investment of GenAI. In addition, its adoption allows insurance companies to offer an offer that exceeds standards. Through the transformation of risk assessment, customer engagement, risk selection or contract adaptation, companies are able to provide faster and more accurate claims resolutions, creating a better policyholder experience and improving operational efficiency.
Insurance companies that manage to balance a clear, top-down strategic approach with on-the-ground experimentation should see the best results in machine learning (ML), predictive analytics, and GenAI. To do this, they must demonstrate flexibility in order to fully exploit the potential of GenAI and meet current and future challenges.
The power of AI to empower employees and customers
In order to respond to these new trends and the digitalization of internal processes, some companies are deciding to implement solutions that harness the immense power of AI to empower both their employees and their customers. For example, Marsh McLennan, a company specializing in risk, strategy and human resources, launched a new generative AI tool for its 85,000 employees around the world. LenAI was developed by Oliver Wyman Digital, in collaboration with the privacy, compliance, risk management, information security and legal teams at Marsh McLennan’s Innovation Center in Dublin, to ensure strict data security standards are met and reduce the risks associated with this new technology. LenAI extends the capabilities of the underlying AI models by adding tools that provide more accurate and useful results (research on Internet, work with a wide range of documents, accurate calculations, access to information from high-quality publications). These features allow employees to be more productive and have a greater impact in their work with clients.
Leveraging AI in Talent Recruitment
The integration of GenAI technology is changing the profiles recruited from the sector, with a growing demand for the number of talents with technical training. For example, Microsoft plans to invest heavily in AI activities and will create up to 550 jobs in Ireland over the next three years. As a result, Ireland has been chosen as a key location for Microsoft’s global AI innovation ambitions, contributing to the development of new technologies for its global operations and covering some of the key areas the company will focus on in the future, including insurance products. This initiative promises to provide a boost to the AI ecosystem in Ireland.
Concerns about prejudice and discrimination
Insurance companies benefit from integrating AI into their systems through more accurate and efficient processes. This, however, raises questions and concerns about the complexity of AI systems, bias and discrimination. According to EIOPA, insurance companies seek to put in place adequate governance and risk management measures to mitigate these risks. Dark patterns identified in a digital context can mislead and deceive customers.
In the insurance field in particular, AI has retained certain biases that generate discrimination based on social class, race and gender. Because they are deeply rooted in vast historical data, it is not easy to mitigate and ultimately eliminate these biases. Insurance companies can therefore take different initiatives to ensure strong integrity for their customers, such as collecting real-time and first-hand data from customers and leveraging region-specific data. One thing is certain, these allow targeted marketing campaigns to attract new policyholders and provide data to algorithms that actively take into account and correct AI bias.
Through the integration of AI operations into their systems, insurance companies are adapting to new trends in order to remain competitive and offer their customers a tailor-made service, navigating between current and future challenges. However, there is a need to strike a balance between excellent data quality, talent acquisition and attention to bias.
