‘Significant shift’ expected in insurers’ approach to AI

Insurers are ready for artificial intelligence (AI) to move beyond task automation and machine learning in 2024.

That was according to consulting and managed services provider Xceedance, which said a focus on testing, workflow transformation, customisation and integration was needed to help ensure that advanced uses of AI were “successful” during the year.

In a statement published yesterday (1 February 2024), Xceedance chief executive Arun Balakrishnan said “there will be a significant shift in how insurers approach generative AI in 2024” as firms look to “advance the ways they apply it across claims, underwriting and other insurance processes”.

“At the same time, they will be focused on ways to build trust in the technology, make it more accessible to everyone in the organisation and pinpoint the return on their investments,” he added. 

Challanges

Xceedance also highlighted how insurers can tackle several AI challenges.

One of those was getting comfortable computers making choices, such as the level and type of coverage that can be provided.

“There must be significant focus on generative AI testing,” the firm said,

”To achieve that level of trust, they’re going to have to try and test, again and again. This will flow across business processes and lines of business.”

Xceedance further suggested that firms should reinvent insurance workflows and the set of underwriting questions a client is asked before providing a quote or policy due to legacy systems hampering innovation.

“Successful insurers will combine technology, data and AI and revise insurance processes from the ground up”, the company said.

Another challenge to address is how insurance models have historically considered clusters of risks in determining rates and coverage.

AI can enable insurers to look at risks individually and Xceedance said some insurers have reached different conclusions, leaving them able to consider business that may have not been done previously, as well as identify new market approaches. 

Meanwhile, the firm said “integrating data sources into AI platforms so the information can be used to make decisions” is also a challenge and its “important to populate the platforms employees use so it’s accessible”. 

“The impact of AI is not something we’ll see overnight [and] it’s important for insurers to be strategic, moving quickly in some areas and proceeding with caution in others,” Balakrishnan said.

“We recently created a centre of excellence for generative AI at Xceedance, offering opportunities to identify, test and apply AI to insurance processes, particularly when it comes to claims and underwriting,” he added.

“We’re so excited about the potential of generative AI to transform every business, but it’s important to move forward with trust and knowledge.”

Xceedance launched the centre of excellence in October 2023.