Insurers warned that technology experimentation is needed to reap benefits

Consulting firm, Bain & Company estimates that generative artificial intelligence being applied to insurance distribution could yield more than $50-billion in annual economic benefits, but the firm warns that companies need to engage in experimentation with the technology to realize those benefits.

Agent productivity 

The firm’s most recent note, entitled It’s for Real: Generative AI Takes Hold In Insurance Distribution, says AI will enable customers to self-serve and will also augment insurance agents’ capabilities. “Early initiatives suggest that the technology will transform distribution in four ways,” they write. These include agent productivity, customer self-service and sales support, hyper personalization at scale and business insights and decisions.

“The technology will help agents to navigate and produce content faster. It will reduce low-value interactions and provide coaching for more effective interactions with customers,” they write. “Combining signals from unstructured data with structured data will yield new insights and aid in risk identification.” 

Reducing commissions 

They add that the benefits will come from three areas: raising productivity and resizing the workforce, lifting sales and reducing commissions as direct channels gain share.

“For an individual insurer, the technology could increase revenues by 15 per cent to 20 per cent and reduce costs by five per cent to 15 per cent,” they state. The note only briefly mentions risks, including data provenance, misinformation, toxicity and intellectual property ownership. “To manage risks, insurers should adopt a responsible AI strategy that relies on successive waves of use cases, testing and learning as they go.” 

The note concludes with recommended actions for technology leaders and distribution leaders. “While generative AI is still in early days, insurers cannot afford to wait on the sidelines for another year,” they warn. “Harnessing the technology will require experimentation, training and new ways of working – all of which take time before the benefits start to accrue.”