It's time to scale up some of the industry’s most promising artificial intelligence (AI) initiatives in property and casualty (P&C) claims, according to a new briefing from Bain & Company, The $100 Billion Opportunity for Generative AI in P&C Claims Handling.
“With its heavy procedures and unstructured data, claims handling provides fertile ground for insurers piloting generative AI technology,” the firm’s researchers write. They estimate that technology could reduce loss-adjusting expenses by up to 25 per cent and leakage – the difference between what is paid and what is owed, which occurs when adjusters deviate from policy guidelines or when supply chain problems cause unanticipated costs – by up to 50 per cent. “But this can only happen if insurers scale up successful initiatives, which will require organizational change and new capabilities,” they write.
Bending the curve on productivity
They add that advances in AI “promise to bend the curve on productivity, after years of hopes for robotic process automation and other digital tools that haven’t fully materialized.” In addition to reducing costs and improving the claims experience for employees and customers alike, “in addition, it could offer greater integrity and control of core processes by catching exceptions and leakage faster.”
The report looks at use cases, saying payouts will become more accurate, generative AI will reduce the time employees spend in administrative tasks and basic handling and it can be used to quickly summarize and compare demand packages from plaintiffs in litigated claims. Generative AI will also reportedly help inexperienced employees get up to speed more quickly while AI assistance can provide constant active coaching.
Rising claims costs
“Some 65 per cent of insurers surveyed by Reuters consider technology, including generative AI, the best approach to addressing rising claims costs. We estimate that generative AI at its full potential could lead to a 20 per cent to 25 per cent decrease in P&C claims loss-adjusting,” they write. “In parallel, we anticipate that generative AI will spur a 30 per cent to 50 per cent decrease in total leakage.”
To get started, the report offers several suggestions: “Given the risks and sustained investment involved, insurers should start with simple but high-value use cases where risk can be managed with human oversight,” they write. “Experience with those use cases will set the stage for rolling out more complex internal use cases and simple external ones, such as adjuster coaching on the job. Then insurers will be positioned to set up complex external use cases, such as a virtual claims assistant.”
