Transforming the insurance experience through AI
Artificial intelligence can help organize data, streamline processes and improve customer service.
Artificial intelligence (AI) is dominating headlines, inspiring utopian visions on one hand and existential fears on the other. Raucous ethics debates rage in the margins, while awe-inspiring discoveries are made constantly.
Whatever your position, one thing is clear: generative AI has changed the game — forever. Yet various industries are adopting AI at different speeds. Retail, for instance, has deployed AI to understand and use consumers’ preferences to recommend what they purchase, while insurance remains an industry ripe for innovation, essential for every business but is still mired in antiquated technology. However, I believe generative AI represents an inflection point that will transform every part of our business and industry.
How AI supports brokers
First, let’s examine why advances in AI are well-suited to support brokerages. These organizations are swimming in unstructured data from clients, including countless pages of documents such as loss histories, third-party contracts and detailed employee demographics —all required details when seeking coverage. For decades, once this information was collected from a client, it sat in filing cabinets, in stacks on desks or in a haphazardly-organized shared drive. Deriving any kind of useful intelligence from this data required the tedious extraction of details from PDFs and byzantine email threads.
Today, recent advances in AI and machine learning (ML) mean this data can be organized and structured automagically, removing the repetitive transactional work from the desks of skilled insurance professionals. From there, insurance professionals can derive insights, develop benchmarks, better defend certain risks and forecast loss. Having time to work on these more strategic efforts allows insurance experts to focus on optimizing clients’ risk management and total rewards programs.
Another way to think about the impact of AI on insurance is that the cost of intelligence just became 1,000 times cheaper. We can leverage AI to empower insurance teams to expertly partner with organizations and leaders.
Considering the job impact
Many have predicted that AI will replace jobs, even ones requiring a high degree of knowledge and years of experience, like an insurance broker. This line of thinking ignores the history of other revolutionary technological advances that actually create new jobs. The prediction also fails to consider the relationship element necessary within insurance. AI can assist brokers and agents by automating repetitive tasks and crawling huge data sets in minutes to extract the most useful information. However, the strategic nature of what brokers do, and the relationships forged with our clients, will not be automated. That’s why we say that technology empowers our experts but doesn’t replace them.
Brokers decipher the different lines of coverage, evaluate the best carriers to approach for quotes, translate which policy program is best, and recommend actions to supplement protection. When leaders are spending precious dollars on a product that can protect their business, they want a human in the mix — an expert who can walk them through all the options and ensure they’re covered appropriately.
The fact is, AI allows those experts to become more productive, better informed, and able to dedicate more time to strategic work with clients. Just consider a few of the key enhancements AI can bring to the business:
- Optimizing service efficiency. AI is expected to harvest hours of capacity back for service team members on data extraction alone for large brokerages. For example, a contracts review team will spend hours reviewing hundreds of pages for clients. An AI solution can instantly read these documents, summarize the insurance requirements within those contracts, and compare them to existing policies that the client has, enabling the professionals to easily address any gaps for those clients.
- Improving decision-making through analytics. AI-boosted predictive models can power the scenario analysis tool that brokers use to explain coverage and trends to clients. Additionally, ML allows for dynamically updated risk models that calculate the likelihood and severity of loss, aiding insurance experts in hyper-personalizing consulting.
- Increasing employee satisfaction. HR professionals will be able to recoup hundreds of hours a year they currently spend answering often repetitive benefits questions from employees. Shockingly, 85% of employees say they do not understand their benefits, requiring the HR team to spend precious minutes answering repetitive questions. An AI assistant trained on the company’s benefits handbook can deliver answers 24/7.
- Boosting margin expansion. Using AI, companies can save money by streamlining common workflows, such as data entry and extraction. But AI can also be applied to high-function tasks, like the contract review example, to serve as a potential revenue stream for a tech-savvy organization.
Like any new technology, AI is not risk-free. Data security, incorrect answers, and biased responses are all concerns without the correct guardrails in place. Companies are awakening to the need to incorporate AI safely and responsibly. A central feature of any insurance AI implementation policy should be the “human-in-the-loop” rule, ensuring humans are involved in vetting, analyzing and delivering the results.
That said, the upside of this novel technology is staggering. We are at the threshold of a new frontier — in insurance, in business and beyond. Many of the possibilities hinge on our ability to harness the power of AI to turn the troves of data from brokerages into actionable insights for clients and streamline work for professionals. Perhaps it goes without saying, but I’ll say it anyway: this technology will impact every part of insurance, the economy and society.
Spike Lipkin is the CEO and co-founder of Newfront. Previously, he worked at Opendoor, where he helped grow a five-person company into a business currently valued at more than $3 billion. Contact him at spike.lipkin@newfront.com.
Related:
The insurance AI revolution: Challenges and opportunities