At Send, we believe in staying ahead of the curve. This is why we kicked off our new webinar series, INFUSE, with our first session titled “No, AI won’t take your job, but it will make your life easier.”
During the session, our panelists, Emanuele Colonnella, Innovation Lead at Generali, Henry Gale, Research and Insights Manager at InsTech, and our Co-founder and CEO, Andy Moss, discussed the pivotal role of AI in the insurance industry now and in the future.
Gen AI’s Mainstream Adoption
The sudden explosion of AI into the mainstream, begs the question: why now, and why is the insurance industry so well-suited for it? AI and machine learning, once on the fringes, have now become integral components of commercial insurance decision-making. These technologies enhance underwriting by improving risk assessment and selection, helping underwriters make better decisions, faster. Ultimately driving efficiency and effectiveness. As carriers embrace AI for their operational frameworks, the role of the underwriter is at a crossroads: adapt and augment or become obsolete.
Emanuele Colonnella, underscored AI’s ability to mimic language and process vast datasets critical for risk assessment as a main factor to its widespread adoption in the industry. “Risk assessment in insurance relies on data,” Colonnella emphasized. “More data means better pricing for clients.”
Henry Gale, echoed Colonnella’s sentiments, emphasizing the data-heavy nature of insurance. Gale emphasized AI’s role in augmenting, rather than replacing, underwriters. “The World Economic Forum ranked over 100 different jobs in terms of their relevance to Gen AI and their likelihood of tasks being either completely automated or augmented. Interestingly, underwriting emerged as the top contender for augmentation, with AI improving the role of the underwriter, rather than replacing them.” Gale stated.
Real-life Use Cases and Practical Applications of AI
Gale, provided tangible examples of AI’s impact on underwriting, citing instances where AI-powered tools have enhanced productivity and streamlined workflows. “Markel has been implementing AI to vet information in emails before reaching underwriters,” Gale explained, showcasing AI’s ability to enhance the decision-making process.
While AI assists underwriters in data analysis, the complexities of governance and compliance remain relatively unexplored. Important questions were raised about the governance of AI systems, particularly concerning decision-making processes and compliance with regulatory standards.
“The traditional method of manually training AI models contrasts sharply with the advancements facilitated by large language models trained on large amounts of text data,” Moss explained. ” Insurance is conversational, especially in complex risk – there’s an ongoing dialogue going on. What Gen AI is doing is extracting information and data points, like a proposed policy, across a broad spectrum. While AI has shown remarkable success in automating mundane tasks, the area of governance and compliance presents unique challenges. For example, we don’t know the rationale behind ChatGPT’s recommendations or decisions.”
Choosing the Right Insurtech Partner
The implications of AI governance cannot be overstated. As AI assumes a more prominent role in underwriting workflow processes, considerations around ethics, transparency, and accountability become paramount. Insurtechs are essential allies in this transformation to provide innovative solutions to industry challenges.
Despite the promises of AI, its successful implementation hinges on strategic considerations, particularly in partner selection and governance. Andy Moss highlighted the significance of choosing an insurtech partner who can keep pace with industry changes. “Selecting the right partner is crucial,” Moss advised. “Adaptability is key in navigating the evolving insurtech landscape.”
“AI is moving quickly. Insurtechs need be capable of evolving in that space,” Moss advised.
Emanuele Colonnella agreed, highlighting the dichotomy between start-ups’ agility and established industry expertise. Although start-ups may offer nimble solutions, their ability to evolve and adapt may be limited. Colonnella emphasized the importance of partnering with insurtechs deeply entrenched in the industry, ensuring scalability and alignment with insurers’ long-term goals.
“Startups can move fast, but small start-ups may struggle to evolve and adapt,” Colonnella cautioned. “Partnering with insurtechs who deeply understand the (commercial insurance) industry is essential for scalability.”
The Future Role of AI in Underwriting
Underwriting involves both art and science, and certain aspects of underwriting cannot be replicated by algorithms. The core skills of an underwriter like analyzing risk factors to determine suitable products and pricing, will stay, and AI will replace the mundane tasks.
Henry Gale dispelled concerns about AI replacing underwriters, emphasizing AI’s role in augmenting their capabilities. “AI is enhancing underwriters’ ability to perform skilled work, making their jobs more rewarding,” Gale reassured.
Emanuele Colonnella also shed light on the expanding roles created by AI, emphasizing that AI’s integration will create new opportunities, demanding a higher level of expertise. Underwriters will play a pivotal role in ensuring insurers meet evolving customer needs, necessitating collaboration with data scientists to analyze and interpret large datasets, collaborating with product developers to design tailored insurance products, and partnering with customer service representatives to ensure seamless customer experiences.
Looking Ahead: The Future of AI in Insurance
As the webinar ended, the panelists each offered one piece of advice to the audience.
- Henry Gale advised underwriters to embrace AI as it will make their careers more rewarding and businesses more successful.
- Andy Moss encouraged a proactive stance, stressing the significance of comprehending and experimenting with AI technologies. His suggestion was straightforward: gain a deeper understanding by experimenting with AI, such as ChatGPT, to grasp its capabilities and limitations firsthand.
- Emanuele Colonnella emphasized the imperative of innovation, “Tech is powerful, the potential is not fully understood. As innovators, it’s our role to figure it out. If you don’t, your competitors will.”
With the right partnerships, governance frameworks, and talent strategies in place, insurers can leverage AI to navigate uncertainties, foster innovation, and ensure a fairer and more resilient industry for years to come.
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