The Big Question July/August 2023: What will the future state of play look like between insurance and AI?

Vinod Singh, chief technology officer, Concirrus

Much like the advent of the internet 25 years ago, the introduction of artificial intelligence (AI) will change everything about how we do business in insurance.

Just as we’ve seen business models that are entirely dependent on the internet, so shall we see those that are entirely dependent on AI – whether that is enabling improved risk assessment, fraud detection, claims processing or customer service. It will make insurance more accessible and affordable, with instant quotes and multiple distribution channels.

AI systems are often difficult to understand, making it hard to explain decisions to customers, But, this will be key for regulators to ensure fairness and a lack of discrimination. Data privacy and security are crucial due to the sensitive nature of the information involved.

Despite these challenges, the future of insurance with AI looks promising. Insurers will be able to offer even more personalised and affordable policies while reducing costs – this will enhance accessibility and protect people from financial loss.

Companies that adopt AI responsibly and effectively will thrive, as it automates tasks, improves efficiency, reduces costs, enhances data analysis and decision-making and enables personalised products and services. AI’s impact on the insurance industry will be transformative, benefiting both insurers and policyholders.

Ian McKinney, midlands and south west corporate director, Verlingue

On the hype cycle, AI sits firmly in the ‘peak of inflated expectations’, with much of the publicity focus on large language models and generative AI. Senior leadership teams are divided between those seeing sunlit uplands of increased productivity and soaring profit ahead and those fearing for the end of their business altogether.

As usual with emerging tech, the reality is almost certainly something less exciting than hoped for and less dangerous than feared. Indeed, people forget that AI is already here and already making an impact. If you have used any online chatbox in the last few years, you were probably speaking to a robot – whether they admitted it or not. Lemonade recently settled a claim in two seconds using their claims bot AI Jim – including fraud checking.

Beyond customer chat, the key impact of AI is around data – more specifically, the possibility that AI can sift data and find patterns that we have heretofore missed.

Using information to predict outcomes is the core of our market and I suspect there is a good chance that AI will be better at it than humans. If so, that would mean a more efficient market, with increased productivity. The challenges will be keeping data secure and avoiding unintended consequences – humans will still be required for the time being.

George Beattie, head of innovation, CFC

AI has been at the forefront of everyone’s minds since the explosion of ChatGPT onto the stage at the start of 2023.

Unfortunately, insurance has long had an uncomfortable relationship with product innovation, whether associated with technology or not. We’re generally content with tinkering with existing products, but given the speed of change in today’s world and especially concerning AI, the world won’t wait for us to address the protection gap – the space between what insurance does today and what our customers need it to do in the future.

In the next few years, we’re going to see AI liabilities come to the fore. These models can and will fail. They will make mistakes and many will exhibit bias. Insurers will have to find a way to support clients with that quickly.

The insurance industry will be able to accommodate these risks for the next three to five years, but it’s going to get increasingly hard as more novel first party risks develop – AI terrorism, for example. I wouldn’t be surprised to see a defined, standalone AI market with its own specialist broking and underwriting assets develop in the next 10 years.

In the meantime, the most important job for the insurance industry is to look closely at this rapidly evolving technology and to approach the question of how to work with AI with constructive cynicism. Just because we can integrate AI into parts of the value chain, doesn’t mean we should - we must always have an eye on what is best for the customer and go from there.

Toby MacLachlan, chief executive, Ignite

AI will reshape insurance for insurers, brokers and their customers. Insurers will, and already are, making use of AI to make better pricing decisions and handle claims.

Brokers will be able to access data faster using AI, interact with customers more seamlessly and improve their online journeys.

And customers, even buying lower value policies, will expect to interact with more intelligent digitised insurance agents to create bespoke policies that are less formulaic and better tailored to their needs.

Ignite and Verisk plan to be a key part of this coming revolution, having already launched an ‘AI Layer’ that allows brokers to interrogate their data using natural language queries in a way that is GDPR-compliant, quick and accessible.

We believe there is a huge future for AI models in all facets of insurance. Making these tools easily accessible to brokers and insurers without requiring large infrastructure changes is the key short-term challenge for AI’s adoption in the UK.

Tal Potishman, innovation and change director, Markel UK

AI is already impacting the market, but each company will use the technology in a different way.

Recognising the transformative potential of AI, Markel is using this technology to improve customer service through faster response times and better underwriting decision making.

Combining the knowledge and experience of our sector-expert underwriters with specific data points on care, technology and other sectors, is fundamental to making informed underwriting decisions quickly. For example, we extract and analyse the detailed data contained in CQC reports to support our care underwriters’ decisions.

Taking another example, our eTrading team - Connect - uses AI-based technologies to ensure they focus their underwriting effort on risks that fall within appetite. This enables brokers to receive speedy yes or no answers to their proposals, doubling productivity and improving turnaround from 24 hours to 2 hours.

For Markel, speed does not come at the expense of the service levels on which our reputation was built. Continuing to trade with our brokers in ways that suit them will remain central to how we do business.

James Nicholson, chief claims officer, Zurich 

When it comes to claims, AI has been considered a silver bullet for claims handling. Whilst we know AI could see claims paid in a matter of seconds, is that what customers really want? We now have a much greater understanding of its capability to augment certain parts of the process.

But, what we want to retain now and in the future is ‘digital with a human touch’. This is essential, especially for vulnerable customers who may need more support throughout the process.

Our newly launched concierge service has really supported this – already we’ve seen a 10% increase in our customer satisfaction scores which speaks volumes. Any customer that is identified as vulnerable will automatically be allocated with concierge support.

For every upside of AI there is a flip side that needs to be managed carefully. Harnessing the power of AI for both creativity and productivity is key, however, it is critical we put our customers first and strike the right balance for them.

Jerry Wallis, head of industry strategy, SS&C Blue Prism

The rise and introduction of intelligent automation (IA) has brought about a new era of possibilities for the insurance industry. The gradual adoption of IA technologies into an insurance firm represents the future of what can become a much more technologically advanced sector.

By embracing AI and IA technologies, insurers are empowered to address various challenges and transform operations across the entire value chain – this includes revolutionising product development, underwriting and policy management, claims processing and other crucial processes.

IA is a combination of components, including AI, robotic process automation (RPA), business process management and other complementary technologies that enable companies to advance workflows and streamline end-to-end processes.

Digital labour helps workers by automating repetitive and mundane tasks, freeing people from repetitive and time-consuming work. Digital workers connect to legacy or modern applications to automate business processes through a variety of automation techniques.

For instance, intelligent document processing, improved customer service via chatbots, better risk assessment with AI features of automation identifying patterns and predictions, enhanced fraud detection and efficient underwriting.

AI and IA will redefine processes within the insurance industry, but also help insurers innovate and develop new products and services quickly and effectively, putting them ahead of competitors and allowing them to and meet the evolving needs of their customers.