First in a series on how the insurance industry now sees Gen AI and its potential.
Last fall, the insurance industry was looking at
Heading into this fall, the industry has advanced to targeting specific applications for Gen AI, such as
The industry's spending on Gen AI capabilities is increasing and more insurers are adopting the technology, according to consultants' research.
Redhand Advisors' June survey of 998 risk management information systems (RMIS) professionals found that one in ten now use Gen AI, but nearly half of those surveyed expect to adopt Gen AI in the next three years.
In July, Boston Consulting Group research bore out the projected growth in Gen AI for insurers. A survey of 330 IT buyers at director level or higher, from various industries, found that their Gen AI investment on average would grow 30% over the next three years. The research also broke down adoption and plans by industry and found insurance to be a lagging industry, with at least 40% of its companies having done little or no adoption of Gen AI.
If insurance companies are as interested as these surveys indicate, there appears to be plenty of room for them to increase their use of Gen AI.
Rima Safari, a partner in the insurance practice at PWC, said commercial lines show potential for Gen AI applications. "When there are broker requests coming in, we're seeing a ton of value in data ingestion before you get into the underwriting process," she said. "We're seeing the same thing in group insurance, as opposed to personal lines, where there is a lot of data to ingest."
Jason Ralph, a partner at McKinsey & Co., speaking at the National Association of Insurance Commissioners (NAIC) summer conference on August 13, identified four ways Gen AI can create value for insurance companies:
- Enabling customer journeys. This relates to applying Gen AI in the form of chatbots to support customer service reps.
- Summarizing complex information, to generate insights and create reports, using data sets that were not otherwise being leveraged.
- Providing context. Creating new marketing material, going beyond just digesting and responding to information.
- Developing technologies. Using Gen AI to summarize text and code, and also to digest what code accomplishes in insurers' operations. This can reduce modernization of legacy systems that typically takes five years, and get it down to less than two years to complete.
However, Ralph cautioned, both technology itself and talent, as well as data management capabilities, can limit what insurers may achieve using Gen AI.
"We've seen a recalibration of expectations," he said. "When we first started talking about generative AI to our clients, a lot of the focus was on finding use cases where the sky's the limit. Something that fundamentally transforms the way that we do business and has limitless potential. The ability to fundamentally change the way that insurance is bought and sold. We've started to see very quickly that there are clear limits."
