Generative AI’s impact on the insurance industry and consumer – Lloyd’s

The increase and rapid adoption of technology has turned the market’s “eyes towards AI”, specifically generative AI (GAI), according to Iryna Chekanava, senior manager at Lloyd’s Lab.

GAI is a subset of AI that can generate media such as text and images – ChatGPT is an example of this technology.

Iryna explained to Insurance Times that “a common theme in AI discussions is to say technology is not new to the insurance industry”.

However, she noted that “AI been extensively adopted in predictive models and by emerging classes of business”.

According to FintechOS’ study, entitled Generative Artificial Intelligence: The Technology Polarising the Financial Services Industry, which was published on 22 November 2023, 44% of UK insurance institutions are already using GAI today, with 48% investing in GAI research and another 39% in its implementation.

For example, in March 2023, Zurich said that it was experimenting with ChatGPT as it explored how it could use the technology for tasks such as extracting data for claims and modelling.

More recently, on 9 October 2023, Sedgwick said it had been using artificial intelligence (AI) to enhance the claims experience for customers.

Warning

However, Catherine Carey, head of marketing at Consumer Intelligence, warned that it was “important” for the industry to consider the “impact on its customers” and how it would provide, and benefit from the implementation of AI.

Her comments came after a Consumer Intelligence survey, conducted via its consumer panel Viewsbank, in September 2023, which collected the thoughts of 1,060 nationally representative consumers on preferred methods for reporting an insurance claim.

It found that 64% of respondents favoured reporting a claim over the phone with a call handler, while 29% preferred an online form with human review. Only a combined 7% expressed a willingness for AI to handle this task.

Carey explained that, during “vulnerable” moments such as car accidents or home emergencies, respondents did not perceive AI as the ideal option.

She said: “While there’s a considerable industry focus on how AI can address these concerns, it’s crucial to first consider the impact on customers and how they will experience these changes.

“It’s essential that, when incorporating AI, the industry does the right thing by thinking about AI from the consumer perspective.”