How to Use Generative AI in the Insurance Industry
With Generative AI making a significant impact globally, it’s important to explore its applications across different industries. The insurance sector, in particular, stands out as a prime beneficiary of AI technology. In this article, we delve into the reasons behind this synergy and explain how AI can be effectively utilized in insurance.
You will read more details about leveraging Chat GPT and Generative AI in insurance. Also, Seven use cases can be utilized for automation in insurance, and some of the limitations of using ChatGPT and Generative Artificial Intelligence in the insurance industry.
Table of Contents
- Use of AI in the Insurance Industry
- What is Generative AI?
- 7 Use Cases of Generative AI in the Insurance Industry
- The Challenges of Gen. AI in Insurance
- Implementing AI in the Insurance Industry
- Additional Resources
What is Generative AI and What Does it Mean to Insurance Industry?
Generative AI, including natural language processing and large language models, is a form of machine learning (ML) that has been around since the 1950s. Machine learning is a subfield of artificial intelligence (AI) that involves computers analyzing large amounts of data to draw informed insights and make predictions.
What makes Generative Artificial Intelligence different, especially large language models, is that it creates based on prompts and a massive amount of data it’s been pre-trained on. Using natural language processing, the output can take the form of text, audio, images, video, and more. Think of it like autocomplete on steroids. That’s basically what Generative AI does. It produces answers to prompts based on patterns in existing data.
That’s why Generative AI algorithms, including large language models, are constantly evolving—to better understand patterns in language, images, video, and so on that it can pull from to generate accurate responses.
7 Use Cases of Generative AI in Insurance Industry
Generative AI is rapidly transforming the insurance industry, offering a multitude of applications to enhance efficiency, operations, and customer experience. In this overview, we highlight seven key use cases, from refining risk assessments to extracting critical business insights. As insurance firms navigate the tech-driven landscape, understanding and integrating Generative AI becomes imperative. Dive in to discover its transformative potential in the sector.
1. Improve Risk Assessment
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.
Generative AI can improve the risk assessment process in a few ways. For one, it can be trained on demographic data to better predict and assess potential risks. 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.
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.
Another way Generative AI could help with risk assessment is by aiding coders in creating statistical models. Programmers can use Gen. AI to review or detect bugs in code. This ability can speed up the programming work, requiring companies to hire fewer software programmers overall.
In the long run, the improvements to risk management offered by Generative artificial intelligence solutions can save insurance businesses a lot of time and money.
2. Enhance Underwriting
Generative AI can also enhance the underwriting process. Typically, underwriters must comb through massive amounts of paperwork to iron out policy terms and make an informed decision about whether to underwrite an insurance policy at all. But ChatGPT can do a lot of this work for underwriters.
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.
As a result, the underwriting process will be much more thorough, and overall claims costs will be lower. Plus, underwriters will be able to work more efficiently by processing applications faster and with fewer errors, which, in turn, can lead to higher customer satisfaction ratings.
3. Streamline Claims Processing
When it comes to processing insurance claims and aiding in claims prevention, Generative AI can automate some routine tasks, such as data entry and analysis. You can also use it to summarize long documents or organize claims by priority. All of this reduces the time and cost of processing claims, so you can get more done and keep customers happier.
Of course, there will always be a need for human touchpoints in claims processing. However, by using Generative AI to speed up some parts of the process, you’ll cut operational costs and improve the overall customer experience, including elements related to claims processing.
4. Insurance Fraud Detection
Insurance fraud is a major industry in and of itself. According to the FBI, $40 billion is lost to insurance fraud each year. That’s an average annual cost of $400 to $700 per family! Unfortunately, it’s impossible to prevent all insurance fraud, so insurance companies offset its cost by working it into insurance premiums.
Identifying patterns of the client’s claim
However, there are ways to reduce insurance fraud with Generative AI. For example, you can use Generative AI to analyze claim patterns and detect fishy behavior. If something doesn’t fall in line with expected patterns, Generative AI can flag it. From there, trained staff can then review and investigate the claim to help ensure it’s legitimate.
By implementing Generative AI in fraud prevention departments, insurance companies can reduce the number of fraudulent claims paid out to insureds, which would boost their overall profitability. Insurance businesses could then pass those savings on to good customers in the form of lower insurance premiums. It’s a win-win!
5. Customize Marketing
Another way insurance companies can use Generative AI is in marketing. They can use it to create custom campaigns based on insights from prospective customer queries and data.
For example, Generative AI can analyze large data sets about demographics, purchasing history, and online customer behavior. From there, it can segment potential customers into different groups and create targeted marketing campaigns just for them.
Let’s say many of your leads are in the 50 to 70 years of age range. This is a time when many are retiring or trying to retire. Generative AI can help you target these potential customers by creating marketing copy around retirement questions and what implications it has for insurance decisions. That way, your marketing will more easily resonate with potential customers, and they will be more likely to reach out to learn more.
Over time, leveraging Generative AI can significantly improve your marketing ROI. Why? Because your brand’s communication with potential clients will become more relevant and consistent. As you nurture them through your sales funnel, leads will stop thinking of your company as just another corporate brand and may start turning to you for professional advice. This can lead to more sales and repeat business.
6. Personalize Products and Services
Insurance companies can also use Generative AI to serve existing customers with personalized products and services. For example, you can develop a conversational AI chatbot powered by Generative AI to answer specific, customer inquiries and questions about policy coverage and terms.
Integrating Conversational AI in insurance industry brings numerous benefits, including the potential for cost savings by reducing the need for live customer support agents.
Similarly, you can train Generative AI on customers’ policy preferences and claims history to make personalized insurance product recommendations. This can help insurers speed up the process of matching customers with the right insurance product.
Generative AI can help with other insurance services, too.
For example, it can generate policy and claims documents for customers upon request. That way, they don’t have to wait for human staff members to process their requests. They can get exactly what they need when they need it. In other words, Generative AI can automate customer services on demand.
7. Extract Valuable Business Insights
Finally, 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.
It could then summarize these findings in easy-to-understand reports and make recommendations on how to improve. Over time, quick feedback and implementation could lead to lower operational costs and higher profits.
At the end of the day, it’s impossible to list all of the potential use cases for Generative Artificial Intelligence & ChatGPT in the insurance industry since the technology is always evolving. 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.
Challenges of Leveraging Generative AI in Insurance
It’s important to note that despite all the benefits of using Artificial Intelligence in insurance, like all technologies, it has its limitations. Here are a few of them:
- Limited knowledge. Many AI tools are only trained on data up to a certain date (September 2021 in the case of ChatGPT). As a result, outputs may not reflect the most recent data and may be flawed as a result.
- Potential bias. Because many Gen. AI tools are trained on publicly available data, they may reflect bias in their outputs. For example, if trained on the internet, Generative AI may reflect the biases that exist on the internet.
- Inaccuracies. Though Generative AI tries to be as accurate as possible, it can make mistakes, especially when it is forced to iterate too long on the same prompt. In the case of ChatGPT, too many questions may confuse it and cause it to “hallucinate.”
- Unequipped for complex underwriting. Underwriting can get complex when it involves many human variables. AI may not be able to handle these since it operates mostly on hard data.
- Ethical concerns. Data privacy is a major concern worldwide. As cybercrime continues to grow, Enterprise insurance businesses must be extra careful when letting Generative AI handle sensitive information. They must also be careful about using facial recognition apps, as not all consumers want their facial data stored.
- Lack of empathy. By nature, Generative AI cannot show real empathy. This can become a problem when addressing customer concerns and acknowledging moral hazards.
- Regulatory limits. As Generative AI evolves and becomes more widespread, governments will try to regulate it with new legislation. Keeping up with and complying with these regulations could prove costly for an insurance company.
How to Start With Implementing AI in the Insurance Industry
Now that you know the benefits and limitations of using Generative Artificial Intelligence in insurance, you may wonder what to do next.
The true potential of AI extends far beyond just cutting expenses. The holy grail for businesses, especially in the insurance sector, is the ability to drive top-line growth.
– Muddu Sudhakar, Co-founder & CEO, Aisera
If you’re an insurance company looking to leverage AI for automation in insurance, you’ve come to the right place. At Aisera, we’ve created tools tailored to enterprises, including insurance companies. We offer products such as virtual assistants, personalized policy recommendations, claims automation, dynamic forms, workflow automation, streamlined onboarding, live AI agent assistance and more.
We also have tools for enterprises in the following industries: Education, Federal, State, and local Government, Financial Services and Banking, Healthcare and Hospitals, Hi-Technology, Hospitality, Travel and Transportation, Insurance, Media and entertainment, Pharma and Biotech, Retail & eCommerce, and Telecom & Utilities.
Whatever industry you’re in, we have the tools you need to take your business to the next level.
The human touch won’t ever go away. However, companies that use AI to automate time-consuming, mundane tasks will get ahead faster. So now is the time to explore how AI can have a positive effect on the future of your business.
Feel free to request a demo of one of our products today to learn more about them. We look forward to getting to know your business and matching it with the right Generative AI solution to help it grow.