Since Open AI’s ChatGPT platform exploded onto the scene in late 2022, the world has been going nuts for artificial intelligence.

The rate at which the technology has evolved since then is truly staggering. The latest iteration of ChatGPT, GPT-4, is eight years ahead of where industry experts predicted the technology would be at this point and we are already seeing other platforms emerge which can carry out even more complex tasks. Within the next ten years, there will likely be very few roles which have not been either replaced or significantly altered by artificial intelligence technology.

As a primarily data driven industry, insurance is set to be severely disrupted by AI technology and we are already seeing it play an increasingly vital role in the way brands in the space collect and process data at all levels of the business.

AI Insurance

AI technology is being used by insurance companies to improve the processes by which they evaluate risk and provide customers with bespoke quotes which accurately reflect their likelihood of becoming a future claimant. AI can bring together vast amounts of data from historical claims information, credit scores, and even social media activity.

"Insurers get access to more and more data at the time of underwriting thanks to the digitalization of existing touch points or access to new data assets with digital partners – just consider telematics, remote sensors, satellite images or digital wellness records,” says Swiss RE Group. "The ability of insurers to convert this data into actionable insights for underwriting, is a key competitive differentiator, as it allows them to offer customers more tailored coverage and pricing.”

Research by TestingXperts found, when it developed intelligent claim validation software leveraging AI and intelligent robotic process automation (RPA) for one of the largest independent insurance companies in the US, claims accuracy improved by up to 99.99%, operational efficiency increased by 60% and customer experience improved by 95%.

AI technology can also be leveraged by insurers to identify and eliminate fraudulent activity. Through the automated analysis of data patterns and identification of suspicious activity therein, AI helps insurers save money by reducing the number of fraudulent claims which result in a payout.

Barriers to Embracing AI

Research by Deloitte suggests, whilst 32% of software and internet technologies have begun investing in AI, only 1.33% of insurance companies have invested in AI. This provides significant opportunity for brands to differentiate themselves from competitors by becoming an early adopter of the technology.

However, with the technology being relatively young – especially at the level of sophistication we are seeing today – there still exist many challenges to successfully embracing AI.

A lack of high-quality data is chief among these. As the technology becomes more ubiquitous, this will likely improve, however, we must consider the increasing prioritizing of data privacy in the minds of customers and organizations. With huge names such as Google becoming increasingly restrictive on how companies can gather data on users – such as the withdrawal of third-party cookie support from Chrome set to come into force in 2024 – insurance brands are going to need to work harder to establish quality data sets from which AI technology can draw information.

Then there’s the question of expertise. It’s one thing for a skilled reporter to research AI and create an article which lays out the current state of the technology and its predicted direction of travel, but another matter entirely to integrate it into a pre-existing organizational structure. Attracting IT talent which has the knowledge and the skills to implement your AI strategy should be a top priority for HR departments in the insurance industry moving forwards.

These barriers must be overcome if insurance brands want to create sophisticated data platforms which are able to compete in the new world of AI-powered business. Forget all those people who still think nonsense like the metaverse will be important for industry in the coming years – artificial intelligence is the next industrial revolution.

"Artificial intelligence is as revolutionary as mobile phones and the Internet,” says Microsoft Founder, Bill Gates. "The development of AI is as fundamental as the creation of the microprocessor, the personal computer, the Internet, and the mobile phone. It will change the way people work, learn, travel, get health care, and communicate with each other. Entire industries will reorient around it. Businesses will distinguish themselves by how well they use it.”

Final Thoughts

AI is no longer just a buzzword. The technology is evolving at a rate which is blowing all predictions out of the water and businesses need to start adapting now. Applications such as data processing and analysis in the insurance industry are perfect for the technology in its current form.

Artificial intelligence is certain to be part of the conversation at Digital Insurance Connect 2023, being held in August, at the Austin Marriott Downtown.

Download the agenda today for more information and insights.