In 2022, a staggering 22% of customers have voiced dissatisfaction with their P&C insurance providers. The crux of their grievances? The American Customer Satisfaction Index (ACSI) reveals a pressing need for improvement, especially in areas like the availability of discounts, speed of claims processing, and clarity of billing statements.

Amidst this backdrop, Generative AI for insurance emerges as a beacon of hope. Beyond its prowess in crafting content, Generative AI, powered by models like GPT 3.5 and GPT 4, offers a transformative approach to insurance operations. It promises not only to automate tasks but also to elevate customer experiences and expedite claims. 

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.

 

 

What is Generative AI for Insurance?

 

 

The insurance landscape is on the cusp of a transformative shift, with Generative AI at its helm. From a market size of $346.3 million today, it’s poised to skyrocket to an impressive $5.5 billion by 2032, reflecting a CAGR of 32.9%. But what does this mean for insurers and their clientele?

Generative AI is being harnessed to redefine customer experiences. Integrating AI-driven virtual assistants alleviates routine burdens from professionals, enabling more genuine, empathetic interactions. 

Moreover, it’s proving to be useful in enhancing efficiency, especially in summarizing vast data during claims processing. The life insurance sector, too, is eyeing generative AI for its potential to automate underwriting and broadening policy issuance without traditional procedures like medical exams. Some companies have already begun testing this out.

 

Read more: Top 10 Use Cases Of Generative AI In Financial Services And Banking

 

Deloitte envisions a future where a car insurance applicant interacts with a generative AI chatbox. This system, in tandem with an “anonymizer” bot, crafts a digital twin, streamlining quote generation and underwriting, while sensors in cars simplify claims processing.

 

How Generative AI Can Revolutionize Insurance Operations

 

 

Boston Consultancy Group emphasizes that Generative AI applications promise significant efficiency and cost savings across the insurance value chain. 

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.

However, the mere adoption of Generative AI isn’t enough. 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. 

 

Key Benefits of Generative AI for Insurance

 

 

Fraud Detection through Simulations and ML Models

The insurance industry faces a mounting challenge with fraud, as highlighted by a recent Coalition Against Insurance Fraud (CAIF) study. It estimates losses due to insurance fraud in the U.S. at a staggering $308 billion.

Generative AI for insurance offers a solution. It can simulate fraudulent and legitimate claims, training machine learning models to discern potential fraud. These models can then evaluate new claims, pinpointing those with a high likelihood of fraudulence. 

By analyzing vast datasets, Generative AI can detect patterns typical of fraudulent activities, enhancing early detection and prevention.

Companies like Oscilar, specializing in real-time fraud prevention for Fintechs, are integrating Generative AI to bolster their defenses, highlighting the technology’s growing importance in modern fraud detection strategies.

 

Faster Claims Processing

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.

Enter Generative AI for insurance. 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. Imagine a scenario where a customer, post-accident, uploads images and details of their damaged vehicle. 

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. 

Incorporating real-world applications, Tokio Marine has introduced an AI-assisted claim document reader capable of processing handwritten claims through optical character recognition. 

 

 

Responsive and Efficient Customer Service

An IBM report says, “85% of execs say generative AI will be interacting directly with customers in the next two years.”

A McKinsey report titled “The economic potential of generative AI” sheds light on the transformative potential of this technology in customer service. The report estimates that Generative AI could slash the volume of human-serviced interactions by a staggering 50%. Furthermore, its application in customer care functions could boost productivity, translating to a value increase of 30 to 45% of the current function costs.

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. 

 

Better Risk Assessment and Premium Determination

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%). 

Yet, this growth brings challenges. The industry’s top concerns include risks associated with business models (26%), cybersecurity (23%), and market fluctuations (20%). In response, 77% of insurers are proactively crafting or implementing risk management strategies.

Generative AI for insurance offers a solution. By analyzing historical data and discerning patterns, these models can predict risks with enhanced precision. This not only refines underwriting decisions but also allows for personalized coverage options. 

Moreover, Generative AI’s prowess in simulating varied risk scenarios is invaluable. By drawing from past customer data, these models can generate potential future scenarios, aiding in better risk estimation and premium determination.

 

Data Driven Insights

Ajish Gopan, Capgemini’s VP of Global Data & Insights for Insurance, emphasizes the disparity between companies’ perception of their data quality and its actual utility, suggesting, “Much more can be done to close the chasm between how companies perceive the quality of their data and its actual usefulness.”

Generative AI steps in to bridge this gap. By harnessing Generative AI-driven customer analytics, insurers gain profound insights into customer behaviors, prevailing market trends, and nascent risks. This data-centric approach equips insurance companies with the tools to craft innovative services and products, precisely aligned with the dynamic needs and preferences of their clientele. In doing so, they not only address immediate customer requirements but also secure a formidable competitive edge in the market.

 

Top Generative AI Use Cases in the Insurance Industry

 

 

Personalized Insurance Policies Tailored to Individual Needs

The era of generic, one-size-fits-all insurance policies is being eclipsed by the dawn of personalized coverage tailored to individual needs. Generative AI models are at the forefront of this transformation. 

By analyzing specific customer data points, such as age, health history, and location, these models can craft policies that align perfectly with individual circumstances. The result? More comprehensive coverage for the insured and heightened customer satisfaction.

 

 

Image and Video Analysis for Swift Claims Processing

The power of visual data is being harnessed like never before. Generative AI excels in analyzing images and videos, especially in the context of assessing damages for insurance claims. 

Whether it’s a vehicular mishap or property damage, this technology facilitates swift claims processing and precise loss assessment. A real-world application can be seen with the Azure AI Vision Image Analysis service, which extracts a plethora of visual features from images, aiding in damage evaluation and cost estimation.

 

Virtual Assistants and 24×7 Customer Support

The customer-insurer interaction paradigm is undergoing a radical shift, thanks to Generative AI. 

Advanced chatbots and virtual assistants, powered by this technology, are equipped to handle not just routine queries but also engage in intricate conversations. They can grasp complex customer requirements, offering tailored policy recommendations and coverage insights, thereby elevating the overall customer service experience.

 

Read more: How To Leverage AI Assistance For Business Growth: A 5-Step Guide

 

Policy and Product Descriptions 

Generative AI is most popularly known to create content – an area that the insurance industry can truly leverage to its benefit. 

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 can also create detailed descriptions for Insurance products offered by the company – these can be then used on the company’s marketing materials, website and product brochures.

 

Generative AI Powered Customer Profiling

In an age where data privacy is paramount, Generative AI offers a solution for customer profiling without compromising on confidentiality. It can create synthetic customer profiles, aiding in the development and testing of models for customer segmentation, behavior prediction, and targeted marketing, all while adhering to stringent privacy standards.

For instance, Emotyx uses CCTV cameras to analyze walk-in customer data, capturing details like age, dressing style, and purchase habits. It also detects emotions, creating comprehensive profiles and heat maps to highlight store hotspots, providing businesses with real-time insights into customer behavior and demographics.

 

Case Studies of Successful Generative AI Implementations

 

 

At Kanerika, we’ve always believed in the transformative power of Generative AI, especially in the insurance sector. One of our most impactful implementations addresses a challenge many insurance companies face: seamless data integration.

A client approached us with a predicament. A client’s manual process was error-prone, causing delays and compliance issues. With the addition of new data sources like wearables, the complexity grew. 

We automated data extraction using Kafka, standardized data with Talend, and employed Gen AI models like TensorFlow and PyTorch for efficient data alignment. 

The outcome? 

A 22% boost in customer satisfaction, 29% reduction in fraud, and 37% faster claim processing. Our expertise in Generative AI delivered transformative results for our client that helped them overcome their challenges with customer satisfaction, fraud and claim processing.

 

Kanerika – Creating the Future of Insurance with Generative AI 

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. 

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. 

Kanerika’s team of 100+ skilled professionals is well-versed in all the leading generative AI and AI/ML technologies and have integrated AI-driven solutions across the BFSI spectrum, ensuring businesses harness generative AI’s full potential. 

Partner with Kanerika and leverage cutting-edge generative AI solutions for your business.

 

 

FAQs

1. How is generative AI being used in insurance?

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.

2. What is generative AI for insurance underwriting?

Generative AI for insurance underwriting involves using AI algorithms to analyze vast amounts of data to assess risks and underwrite policies more accurately. It can simulate various risk scenarios, predict potential risks with greater precision, and help in setting appropriate insurance premiums, thereby optimizing underwriting decisions and offering tailored coverage options.

3. What is generative AI for insurance brokers?

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.

4. Which company is using generative AI?

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.

5. What problems can generative AI solve?

Generative AI can solve a variety of problems in the insurance industry, such as reducing the time and cost associated with claims processing, improving the accuracy of fraud detection, enhancing the customer experience through personalized interactions, and enabling more precise risk assessment and underwriting.

6. How does generative AI affect the insurance industry?

Generative AI affects the insurance industry by driving efficiency, reducing operational costs, and improving customer engagement. It allows for the automation of routine tasks, provides sophisticated data analysis for better decision-making, and introduces innovative ways to interact with customers. This technology is set to significantly impact the industry by transforming traditional business models and creating new opportunities for growth and customer service excellence.