Generative AI For Insurance: Use Cases And Applications by Kanerika Inc

Generative AI in Insurance: 9 Use Cases & 5 Challenges in ’24

are insurance coverage clients prepared for generative ai?

At Allianz Commercial, Generative AI also plays a multifaceted role in enhancing customer service and operational efficiency. They use intelligent assistants to answer user queries about risk appetite and underwriting. These bots are available 24/7, operate in multiple languages, and function across various channels.

are insurance coverage clients prepared for generative ai?

Her experience spans a wide range of business insurance, including property and casualty coverage and a variety of liability coverages. Her primary focus is on specialized insurance coverages, including Directors & Officers liability, Cyber, Commercial Crime and Professional Liability insurance. Bruno advises and represents policyholders in all industries, including energy, technology, hospitality and consumer products.

Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. The technology could also be used to create simulations of various scenarios and identify potential claims before they occur. This could allow companies to take proactive steps to deter and mitigate negative outcomes for insured people. However, its impact is not limited to the USA alone; other countries, such as Canada and India, are also equipping their companies with AI technology. For instance, Niva Bupa, one of the largest stand-alone health insurance companies in India, has invested heavily in AI. More than 50% of their policies are now issued with zero human intervention, entirely digitally, and about 90% of renewals are also processed digitally.

Such an approach is particularly impactful in sensitive discussions about life insurance, where understanding and addressing buyer concerns promptly is vital. Anthem’s use of the data is multifaceted, targeting fraudulent claims and health record anomalies. In the long term, they plan to employ Gen AI for more personalized care and timely medical interventions.

Furthermore, its application in customer care functions could boost productivity, translating to a value increase of 30 to 45% of the current function costs. The significance of efficient claims processing cannot be overstated, especially when considering an EY report’s finding that 87% of customers believe their claims experiences influence their loyalty to an insurer. Driving business results with generative AI requires a well-considered strategy and close collaboration between cross-disciplinary teams. This convergence across industries allows organizations to leverage capabilities built by others to improve speed to market and/or become fast followers.

How insurers can leverage the power of generative AI

To adopt GenAI in their finance functions, multinational insurers must overcome challenges on multiple fronts. These include managing several accounting standards, ensuring group-level data availability, and navigating the complexity of actuarial calculations. Our team diligently tests Gen AI systems for vulnerabilities to maintain compliance with industry standards. We also are insurance coverage clients prepared for generative ai? provide detailed documentation on their operations, enhancing transparency across business processes. Coupled with our training and technical support, we strive to ensure the secure and responsible use of the technology. Another concern is the foundational nature of third-party AI models, which are trained on massive data sets and need refining for insurance use cases.

While these statistics are promising, what actual changes are occurring within the sector? Let’s delve into the practical applications of AI and examine some real-world examples. As the CEO and founder of one of the top Generative AI integration companies, I will also share recommendations for the successful and safe implementation of the technology into business operations. As the insurance industry grows increasingly competitive and consumer expectations rise, companies are embracing new technologies to stay ahead. The power of GenAI and related technologies is, despite the many and potentially severe risks they present, simply too great for insurers to ignore. To take advantage of the possibilities, senior leaders must develop bold and creative adoption strategies and plans to drive breakthrough innovation.

DTTL (also referred to as “Deloitte Global”) and each of its member firms and related entities are legally separate and independent entities, which cannot obligate or bind each other in respect of third parties. DTTL and each DTTL member firm and related entity is liable only for its own acts and omissions, and not those of each other. Shayman also warned of a significant risk for businesses that set up automation around ChatGPT. GenAI can also assist in scenario modeling, allowing insurers to showcase different financial projections and strategies to investors.

Insurers, as typically cash-rich companies, have ample opportunities to improve cash management to extract additional value. GenAI algorithms can create accurate forecasts and scenarios for financial planning and budgeting by analyzing historical financial data and market trends. This feature is especially important for insurers, because small differences in financial scenarios can significantly affect both the P&L statement and balance sheet. The insights help finance professionals make informed decisions about resource allocation, budgeting, and financial goal setting while expediting responses to managerial inquiries. The technology can assist in compliance management by monitoring regulatory changes, interpreting regulations, and automating compliance-reporting processes.

Many companies are using generative AI, including Tokio Marine with its AI-assisted claim document reader, and Chola MS with its mobile technology for claims surveying. Fintech companies like Oscilar are also incorporating generative AI for real-time fraud prevention, while generative AI consulting companies like Kanerika are implementing generative AI solutions for insurance companies. For insurance brokers, generative AI can serve as a powerful tool for customer profiling, policy customization, and providing real-time support. It can generate synthetic data for customer segmentation, predict customer behaviors, and assist brokers in offering personalized product recommendations and services, enhancing the customer’s journey and satisfaction. This technology holds the potential to simplify the intricate maze of claims management. By generating automated responses to rudimentary claim inquiries, Generative AI can expedite the claim settlement journey, reducing the processing time.

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Our Global Insurance Market Insights highlight insurance market trends across pricing, capacity, underwriting, limits, deductibles and coverages. Kanerika has over 20 years of proven experience in AI/ML and data management. We offer robust, end-to-end solutions that are technologically advanced and ethically sound.

Additionally, artificial intelligence’s role extends to learning platforms, where it identifies specific knowledge gaps among agents. It then delivers targeted training, enhancing employee expertise and ensuring compliance. The technology thereby streamlines the onboarding and upskilling processes. Generative AI identifies nuanced preferences and behaviors of the insured from complex data.

Ultimately, the more effective and pervasive the use of GenAI and related technology, the more likely it is that insurers will achieve their growth and innovation objectives. Firms and regulators are rightly concerned about the introduction of bias and unfair outcomes. The source of such bias is hard to identify and control, considering the huge amount of data — up to 100 billion parameters — used to pre-train complex models. Toxic information, which can produce biased outcomes, is particularly difficult to filter out of such large data sets. Because its algorithms are designed to enable learning from data input, generative AI can produce original content, such as images, text and even music, that is sometimes indistinguishable from content created by people. Discover how EY insights and services are helping to reframe the future of your industry.

Controls could include automated cross-checks or rigorous manual reviews, depending on the sensitivity of the information provided by the AI. For instance, if GenAI is used to predict future financial performance, a separate analytical tool can validate these figures against historical data and flag anomalies. In other situations, manual reviews by experts may be required to ensure that GenAI’s outputs align with business realities. Starting with tasks that are easier to automate or support with GenAI can build momentum and provide quick wins. Similarly, while some GenAI applications can offer significant cost savings, others might enhance accuracy or speed.

For GenAI to be effective, this data needs to be centralized and accessible in a common format. This poses a major challenge for many insurers that still store data locally and do not support data sharing and pooling centrally. BCG’s insurance excellence benchmarking suggests that GenAI can help insurers capture efficiency improvements of 10% to 20% in the overall finance function.

For example, there may be public health datasets that show what percentage of people need medical treatment at different ages and for different genders. Generative AI trained on this information could help insurance companies know whether or not to cover somebody. GenAI’s transformative potential in insurance is especially prominent in the finance function. Insurers can tap into GenAI’s transformative potential to perform specialized processes more effectively, support decision making, and boost operational performance. She advises companies and institutional policyholders on complex and cutting-edge issues involving insurance and risk and represents clients in high-stakes litigation involving insurance coverage disputes.

  • GenAI can also assist in scenario modeling, allowing insurers to showcase different financial projections and strategies to investors.
  • So now is the time to explore how AI can have a positive effect on the future of your business.
  • Such chatbots can revolutionize customer interactions, addressing queries in real-time.
  • It can analyze a wide range of financial market data, policyholder information, and macroeconomic factors to identify potential risks and opportunities for hedging against adverse financial events.

Reach out to our experts to discuss how to make the right decisions to strengthen your organization’s cyber resilience. We Empower businesses worldwide through strategic insights and innovative solutions. Generative AI is most popularly known to create content — an area that the insurance industry can truly leverage to its benefit.

Implement an operating model for responsible adoption

By utilizing machine learning algorithms, it can learn from historical data and accurately process financial transactions, reducing errors and accelerating the overall process. AI’s meteoric rise brings tremendous opportunities—but with them, challenges. We help you realize AI’s full potential by crafting a responsible AI strategy that aligns with your business goals to deliver maximum value.

are insurance coverage clients prepared for generative ai?

So now is the time to explore how AI can have a positive effect on the future of your business. By analyzing patterns in claims data, Generative AI can detect anomalies or behaviors that deviate from the norm. If a claim does not align with expected patterns, Generative AI can flag it for further investigation by trained staff. This not only helps ensure the legitimacy of claims but also aids in maintaining the integrity of the claims process. Generative AI systems are developed based on prompts and extensive pre-training on large datasets. The output can take various forms, including text, audio, images, and video.

Image and Video Analysis for Swift Claims Processing

(See the exhibit.) Moreover, insurers can build a foundation for innovation within the finance function—which, in turn, can promote enterprise-level steering and operational efficiency and support profitable growth. He also identifies gaps in coverage and assists clients in negotiating for improved terms and conditions. He has helped clients maximize their insurance assets under almost all types of insurance policies. GAI’s implementation for threat review and pricing significantly enhances the accuracy and fairness of these processes. By integrating deep learning, the technology scrutinizes more than just basic demographics.

Trade, technology, weather and workforce stability are the central forces in today’s risk landscape. The contents herein may not be reproduced, reused, reprinted or redistributed without the expressed written consent of Aon, unless otherwise authorized by Aon. The generative AI market could grow to a value of $1.3 trillion over next 10 years, up from $40 billion in 2022, according to Bloomberg Research. Navigating the Generative AI maze and implementing it in your organization’s framework takes experience and insight. From choosing the best algorithms to ensuring all security protocols are followed. It is important for companies to pick the right AI Consulting partner to work with.

The era of generic, one-size-fits-all insurance policies is being eclipsed by the dawn of personalized coverage tailored to individual needs. One of the most notable revelations is the potential 40% to 60% savings in customer service productivity. It’s estimated that agents currently spend about 35% of their time navigating through policies and terms. With Generative AI, this time can be drastically reduced, allowing for swift and accurate document queries.

It brings multiple benefits, including enhancing staff efficiency and productivity (61%), improving customer service (48%), achieving cost savings (56%), and fostering growth (48%). With Generative AI making a significant impact globally, businesses need to explore its applications across different industries. The insurance sector, in particular, stands out as a prime beneficiary of artificial intelligence technology.

are insurance coverage clients prepared for generative ai?

Users might still see poor outcomes while engaging with generative AI, leading to a downturn in customer experience. Our diverse, global teams bring deep industry and functional expertise and a range of perspectives that question the status quo and spark change. BCG delivers solutions through leading-edge management consulting, technology and design, and corporate and digital ventures.

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Also, these generated synthetic datasets can mimic the properties of original data without containing any personally identifiable information, thereby helping to maintain customer privacy. In this article, we will explain 9 potential use cases of generative AI in insurance and talk about its own challenges that can be problematic in the insurance sector. You can foun additiona information about ai customer service and artificial intelligence and NLP. The holy grail for businesses, especially in the insurance sector, is the ability to drive top-line growth.

Additionally, Gen AI is employed to summarize key exposures and generate content using cited sources and databases. Effective risk management starts with the ability to identify and define risks. This can be more challenging than it seems as many current applications (e.g., chatbots) do not cleanly fit existing risk definitions. Similarly, AI applications are often embedded in spreadsheets, technology systems and analytics platforms, while others are owned by third parties. Generative AI can be used in creating chatbots that can generate human-like text, improving interaction with customers, and answering their queries in real-time.

Prioritize use cases that align with strategic objectives—whether improving customer experience, enhancing operational efficiency, or reducing errors. The effects will likely surface in both employee- and digital-led channels (see Figure 1). For example, an Asian financial services firm developed a wealth adviser hub in three months to increase client coverage, improve lead conversion, and shift to more profitable products. Helvetia in Switzerland has launched a direct customer contact service using generative AI to answer customers’ questions on insurance and pensions. And HDFC Ergo in India has opened a center to apply generative AI for hyper-personalized customer experiences.

Industry regulations and ethical requirements are not likely to have been factored in during training of LLM or image-generating GenAI models. Insurers will also need to consider the risk of hallucinations, which would require training around identifying them and appropriately labeling outputs generated by GenAI. Existing data management capabilities (e.g., modeling, storage, processing) and governance (e.g., lineage and traceability) may not be sufficient or possible to manage all these data-related risks.

For instance, it can automate the generation of policy and claim documents upon customer request. This automation eliminates the need for human staff to manually process these requests, significantly reducing wait times and improving efficiency. Customers receive the documents they need promptly, precisely when they need them. To determine how likely it is a prospective customer will file a claim, insurance companies run risk assessments on them. By understanding someone’s potential risk profile, insurance companies can make more informed decisions about whether to offer someone coverage and at what price.

are insurance coverage clients prepared for generative ai?

It estimates losses due to insurance fraud in the U.S. at a staggering $308 billion. Boston Consultancy Group emphasizes that Generative AI applications promise significant efficiency and cost savings across the insurance value chain. BCG helps companies rise to the challenge and equips them to lead in the digital future.

Generative AI can be used to generate synthetic customer profiles that help in developing and testing models for customer segmentation, behavior prediction, and personalized marketing without breaching privacy norms. Another way Generative AI could help with risk assessment is by aiding coders in creating statistical models. This ability can speed up the programming work, requiring companies to hire fewer software programmers overall. Aon and other Aon group companies will use your personal information to contact you from time to time about other products, services and events that we feel may be of interest to you.

Through analyses of historical claims data, pattern identification, and simulation of future claim scenarios, GenAI assists actuaries in more accurately forecasting future liabilities. The technology can also automate the calculation of reserve amounts, reducing manual errors and providing more robust and data-driven insights into an insurance company’s financial stability. In the underwriting process, smart tools are embedded to assess and price risks with greater accuracy. The instruments also streamline back-office operations and claims management. For instance, GAI facilitates immediate routing of requests to partner repair shops.

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It predicts evolving market trends, aiding in strategic insurance product development. Tailoring coverage offerings becomes precise, addressing specific client needs effectively. This AI-driven approach spots emerging opportunities, sharpening insurers’ competitive edge. Besides the benefits, implementing Generative AI comes with risks that businesses should be aware of. A notable example is United Healthcare’s legal challenges over its AI algorithm used in claim determinations.

  • The technology can analyze large volumes of historical data and simulate different scenarios to assess sensitivity.
  • The learning curve is steep, but thoughtful, fast-moving retailers will set new standards for consumer experiences and create an advantage.
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  • This document is not intended to address any specific situation or to provide legal, regulatory, financial, or other advice.

That said, these are some of the most obvious ways to implement Generative AI power in the insurance business, and insurance companies that don’t start trying them will be left behind by companies that do. In this overview, we highlight key use cases, from refining risk assessments to extracting critical business insights. As insurance firms navigate this tech-driven landscape, understanding and integrating Generative AI becomes imperative. Our Trade Collection gives you access to the latest insights from Aon’s thought leaders on navigating the evolving risks and opportunities for international business. Reach out to our team to understand how to make better decisions around macro trends and why they matter to businesses.

They were accused of using the technology which overrode medical professionals’ decisions. Generative artificial intelligence (GenAI) has the potential to revolutionize the insurance industry. While many insurers have moved quickly to use the technology to automate tasks, personalize products and services, and generate new insights, further adoption has become a competitive imperative. Generative AI models can generate thousands of potential scenarios from historical trends and data. The insurance companies can use these scenarios to understand potential future outcomes and make better decisions.

PwC’s 2022 Global Risk Survey paints an optimistic picture for the insurance industry, with 84% of companies forecasting revenue growth in the next year. This anticipated surge is attributed to new products (16%), expansion into fresh customer segments (16%), and digitization (13%). A generative model, having been trained on analogous data, can assess the extent of damage, project repair costs, and subsequently assist in ascertaining the claim amount. The insurance industry faces a mounting challenge with fraud, as highlighted by a recent Coalition Against Insurance Fraud (CAIF) study.

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In this article, we’ll delve deep into five pivotal use cases and benefits of Generative AI in the insurance realm, shedding light on its potential to reshape the industry. Explore five pivotal use cases and benefits of Generative AI in the insurance realm, shedding light on its potential to reshape the industry. Based on Bain’s 10 years of research, five themes describe the progress and challenges of earning customers’ advocacy in an increasingly digital experience. Smart companies are using AI to enhance—not automate—the customer experience. Aaron Coombs is a counsel and represents policyholders in insurance coverage disputes and litigation.

All personal information is collected and used in accordance with Aon’s global privacy statement. With a changing climate, organizations in all sectors will need to protect their people and physical assets, reduce their carbon footprint, and invest in new solutions to thrive. Our Employee Wellbeing collection gives you access to the latest insights from Aon’s human capital team. You can also reach out to the team at any time for assistance with your employee wellbeing needs. Generative AI’s prowess extends to the development of advanced chatbots capable of generating human-like text. Such chatbots can revolutionize customer interactions, addressing queries in real-time.

Incorporating real-world applications, Tokio Marine has introduced an AI-assisted claim document reader capable of processing handwritten claims through optical character recognition. Insurers new to Generative AI should start by forming a diverse team of business experts, IT specialists, and data scientists. This team can then identify the best operating model for the organization, ensuring both experimentation and scalable deployment. Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited (“DTTL”), its global network of member firms, and their related entities (collectively, the “Deloitte organization”).

A strong risk-based approach to adoption, with cross-functional governance, and ensuring that the right talent is in the right role, is critical to driving the outcomes and the ROI insurers are looking for. For example, existing MRM frameworks may not adequately capture GenAI risks due to their inherent opacity, dynamic calibration and use of large data volumes. The MRM framework should be enhanced to include additional guidance around benchmarking, sensitivity analysis, targeted testing for bias and toxic content. The key elements of the operating model will vary based on the organizational size and complexity, as well as the scale of adoption plans. Insurers that invest in the appropriate governance and controls can foster confidence with internal and external stakeholders and promote sustainable use of GenAI to help drive business transformation.

As a result, the insurers can tailor policy pricing that reflects each applicant’s unique profile. Successful GenAI adoption entails having an operating model that directs investments to those applications with the highest ROI and chance of success, while factoring in risk and control considerations. Insurers must take an intentional approach to adopting generative AI, introducing it to the organization with a focus on use cases.

Many different jurisdictions and authorities have weighed in on or plan to weigh in on the use of GenAI, as will industry groups (see sidebar). Transparency and explainability in both model design and outputs are sure to be common themes. Generative AI has the power to transform the insurance sector by increasing operational effectiveness, opening up new innovation opportunities and deepening customer relationships. With AI’s potential exceedingly clear, it is easy to understand why companies across virtually every industry are turning to it.

Equally important is the need to ensure that these AI systems are transparent and user-friendly, fostering a comfortable transition while maintaining security and compliance for all clients. In essence, the demand for customer service automation through Generative AI is increasing, as it offers substantial improvements in responsiveness and customer experience. According to the FBI, $40 billion is lost to insurance fraud each year, costing the average family $400 to $700 annually. Although it’s impossible to prevent all insurance fraud, insurance companies typically offset its cost by incorporating it into insurance premiums.

The technology will augment insurance agents’ capabilities and help customers self-serve for simpler transactions. Indeed, MetLife’s AI excels in detecting customer emotions and frustrations during calls. The tool guides employees to adjust their communication style in real time.

Accordingly, insurers should improve existing processes and optimize them in parallel to achieve the maximum benefits of generative AI. The big win often involves combining multiple AI technologies to address different aspects of a project, such as semantic searching or language capabilities. Finally, Chat PG insurance companies can use Generative Artificial Intelligence to extract valuable business insights and act on them. For example, Generative Artificial Intelligence can collect, clean, organize, and analyze large data sets related to an insurance company’s internal productivity and sales metrics.

As insurers begin to adopt this technology, they must do so with a focus on manageable use cases. The regulatory environment for AI in insurance is evolving, and companies will need to navigate these changes carefully. Regulators may require companies to demonstrate the robustness, fairness, and transparency of their AI systems, and especially of the generative AI solutions due to their ethical concerns. Training and fine tuning generative models, particularly large ones, requires substantial computational resources. Smaller companies may struggle to implement generative AI tools due to the high costs involved. Fore more on risk assessment, check out our article on the technologies to enhance risk assessment in the insurance industry.

When an insured encounters unique request scenarios, digital assistants can analyze complex policy details and address emotional nuances. These instruments deliver customized explanations and pinpoint pertinent sections. While these are foundational steps, a thorough implementation will involve more complex strategies. Choosing a competent partner like Master of Code Global, known for its leadership in Generative AI development services, can significantly ease this process. At MOCG, we prioritize robust encryption and access controls for all AI-processed data in the insurance industry. According to a report by, 59% of organizations have already implemented Generative AI in insurance.

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The enhancements to communicating their financial performance and growth potential can be crucial for attracting investment and maintaining stakeholder confidence. The learning curve is steep, but thoughtful, fast-moving retailers will set new standards for consumer experiences and create an advantage. With the strategies and recommendations discussed, your company can navigate the technological advancements more effectively. Some insurers looking to accelerate and scale GenAI adoption have launched centers of excellence (CoEs) for strategy and application development. Such units can help foster technical expertise, share leading practices, incubate talent, prioritize investments and enhance governance. Regulatory risks and legal liabilities are also significant, especially given the uncertainty about what will be allowed and what companies will be required to report.

By implementing Generative AI in their fraud prevention departments, insurance companies can significantly reduce the number of fraudulent claims paid out, boosting overall profitability. This, in turn, allows businesses to offer lower premiums to honest customers, creating a win-win situation for both insurers and insureds. For example, Generative AI in banking can be trained on customer applications and risk profiles and then use that information to generate personalized insurance policies. Furthermore, by training Generative AI on historical documents and identifying patterns and trends, you can have it tailor pricing and coverage recommendations. AI’s ability to customize and create content based on available data makes it an extremely important tool for insurance companies who can now automate the generation of policy documents based on user-specific details.

Generative AI is being used in insurance to enhance customer service, streamline claims processing, detect fraud, assess risks, and provide data-driven insights. It enables the creation of personalized insurance policies, automates document handling, and facilitates real-time customer interactions through chatbots and virtual assistants. Additionally, it aids in analyzing images and videos for damage assessment in claims. The insurance value chain, from product development to claims management, is a complicated process. The complex nature of tasks like risk assessment and claims processing poses significant challenges for an insurance company. Generative Artificial Intelligence (AI) emerges as a promising solution, capable of not only streamlining operations but also innovating personalized services, despite its potential challenges in implementation.

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