Why the insurance sector should keep step with GenAI

In a traditional industry like insurance, change can sometimes happen at a gradual pace. But there’s one emerging technology many businesses might be wise to move quickly on: Generative AI.

Hailed as a transformative force in business, Generative AI (GenAI) refers to deep-learning models that can generate high-quality text, images and other content based on the data they were trained on.¹ While GenAI’s roots trace back to the early days of artificial intelligence in the 1950s, the technology burst on the public scene in 2022, when OpenAI launched a consumer-facing GenAI tool called ChatGPT.²

In the insurance sector, experts say GenAI is “fundamentally reshaping everything from underwriting and risk assessment to claims processing and customer service.” More specifically, GenAI tools “have the potential to automate processes, enhance customer experiences and streamline claims management, ultimately driving efficiency and effectiveness across the industry.”³

In the Canadian Underwriter 2024 National Broker Survey, sponsored by Sovereign Insurance, brokers were asked how beneficial certain changes or investments have been in their organizations. Just over a fifth (21%) of respondents said using artificial intelligence and machine learning tools such as ChatGPT have been highly beneficial to them. Brokers were also asked how beneficial certain investments and actions have been for strengthening their business. Twenty-two percent of brokers indicated AI and machine learning tools have been highly beneficial on that front. 

While it’s still early days for generative AI, there’s no doubt brokers and carriers alike are thinking about how they can harness the power of GenAI across their operations. Here’s a look at a few key areas where the sector can leverage AI. 

Claims management: For carriers, one promising application is in claims management, says Ricky Chan, Senior Solution Architect at Sovereign Insurance. “Generative AI can help automate claims processing and assessment, which in turn increases adjusters’ productivity, allowing them to focus their expertise on more complex claims,” he says. 

Underwriting: GenAI can also help inform underwriting decisions. As Accenture notes, the technology highlights risk control analysis insights to show loss prevention measures in place and the effectiveness of those controls. Generative AI can generate a comprehensive narrative of the overall risk and its alignment to the carrier’s appetite and book, as well as identify and source missing data.⁴

Submissions: For brokers, GenAI has a variety of promising use cases, such as submission preparation and client Q&As. According to Accenture, the effort required to identify adequate coverage and prepare submissions can be dramatically reduced through GenAI. Specifically, the technology can prompt the broker on the types of questions they should ask based on what is known about the insured, the industry the insured operates in, and the risk profile of the insured’s company compared to others. In addition, GenAI could identify potentially overlooked up-sell or cross-sell opportunities.⁵

Information and knowledge: For any company, GenAI can make day-to-day work life easier by performing administrative tasks and knowledge gathering, an area that Sovereign is currently exploring. “There are substantial positive impacts to day-to-day operations, such as summarizing information and meeting minutes, intelligent information search and ease of access of information,” says Ricky. 

Chad Hunter, Vice-President, Information Technology at Sovereign Insurance, adds that Sovereign – like many companies – uses a handful of different platforms and domains, including e-mail, OneDrive, SharePoint and Microsoft Teams. By using a natural language chatbot or co-pilot tool, the company’s knowledge and data could be streamlined. For example, “instead of underwriters having to go to several different spots looking for knowledge, they could use the chatbot… and behind the scenes, that generative AI model will go to all the different areas and provide real-time responses,” explains Chad. 

What’s next for GenAI? Beyond just talking about the possibilities of the technology, many companies in the insurance space – Sovereign included – are now testing and learning. Looking ahead, Deloitte notes that as generative AI moves from possibilities to practicalities, choosing the right use cases, selecting appropriate tools, getting to scale, and accurately measuring progress will all be important steps.⁶

Sources 

¹ IBM, “What is generative AI?” April 20,2023
² Medium, “A Brief History of Generative AI,” Jan. 7, 2023
³ EY, “How insurers can leverage the power of generative AI,” Aug. 28, 2023
⁴ Accenture, “3 ways insurance underwriters can gain insights from generative AI,” March 21, 2024
⁵ Accenture, “5 key generative ai use cases in insurance distribution,” Feb. 13, 2024
⁶ Deloitte, “Now decides next: Getting real about Generative AI,” April 2024