Balancing AI and the Future of Insurance

To be successful in our use of AI, we must remember one thing: A machine cannot replace the need for human touch in our industry.

An artist’s illustration of artificial intelligence (AI)

Artificial intelligence (AI) isn’t new, but what it enables us to do is evolving rapidly. In the insurance industry, we’ve already seen AI transform risk assessment, data analytics and time-consuming administrative tasks. And it’s safe to assume that tomorrow’s technological advancements will have even more dramatic impacts on the way we do business. However, there is one thing we must keep in mind if we are to be successful in our use of AI: A machine cannot replace the need for human touch in our industry.

In a world where consumer behaviors and preferences are ever-changing; the human touch can be critical for successful transactions. The needs of our customers are dynamic, and a one-size-fits-all approach does not account for the complexities and constant shifts happening in their lives. We need people to serve as quality control for AI, to provide the underlying training it requires and to develop and deploy it in ways that create value for society while safeguarding against potential harm. While AI will enhance our ability to do our jobs, striking a balance between technology and a human touch will be key to ensuring it will improve the customer experience, as well.

See also: The Rise of AI: a Double-Edged Sword

Already, AI has brought some key advantages to the table for both business operations and the customer experience:

  • Enhanced predictive capabilities and real-time risk monitoring – The speed and accuracy of AI-enabled data analysis has allowed insurers to obtain significantly more quantified insights into various risk factors and consumer behavior. The integration and synthesis of large datasets from multiple sources helps managers obtain real-time data for better risk portfolios. 
  • Improved underwriting accuracy – Access to more data via telematics, remote sensors, satellite images and digital records helps identify less overt patterns and risks that may be overlooked by humans. The automated evaluation of risk factors also creates a more consistent, streamlined process that reduces human bias and error. 
  • Personalization – Better customer segmentation helps insurers have a better understanding of their desired markets. Plus, by leveraging the digitalization of existing customer touchpoints as well as access to new data sets from digital partners, AI helps insurers provide more tailored coverages and pricing. 
  • Capacity management and cost savings – AI frees up insurers' time by reducing the amount of manual and non-value-add tasks such as data entry, document processing and simple claims handling. 24/7 chatbot support for simple questions and routine items also enables customer representatives to spend more time on advice and retention. 

However, here’s where the balance between AI and human touch gets tricky. Fail to adopt new technological capabilities, and our ability to serve our customers declines. But tread too far down the road of automation, and we lose the trust generated by the expertise, institutional knowledge and empathy our insurance agencies have been building for decades.

For example, the current generation of brokers and agents have the background and expertise that allows them to solve complex and nuanced problems, improvising when necessary to address unique needs. Rely too heavily on AI, and not only does the customer miss out on a personalized experience but that level of guidance slowly erodes over time as new generations of insurance professionals miss out on opportunities to build their skills in providing advice and counsel.

Additionally, while some AI systems may be able to analyze data to provide a customer with the optimal coverage at the best price, they cannot empathize with the customer or provide reassurance in the way that a human can. For instance, AI can offer up a policy from Carrier A, but let’s say the customer would like an alternative option as her brother had a bad experience with that carrier. AI may be able to provide other options but cannot impart the reassurance around why Carrier B is also a great option, like a human can. 

See also: AI and the Future of Independent Agents

As both the insurance industry and AI technology continue to evolve, AI will not have the same level of impact across all functions. In claims management, AI will likely continue to have a significant impact on the validation, assessment and adjudication of claims but a low impact on claims litigation and claims financials. The need for experienced insurance professionals will remain. 

Some customers will adopt new technologies faster than others. Meeting customers where they are, and offering options for how to interact, including both AI-enabled and human options, is an optimal solution for navigating this new age of insurance while still reaching a broad audience of customers. 

The bottom line: As AI continues to permeate the industry and enhance our ability to serve customers, it will only be optimized through integration with the human touch.

Bryan Davis

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Bryan Davis

Bryan Davis serves as executive vice president and head of VIU by HUB, a digital brokerage platform backed and developed by HUB International, the largest personal lines broker in the U.S. 

Davis previously held leadership positions with USAA, Nationwide and AIG.

He is a graduate of Wofford College and has an MBA. He is also credentialed as a ChFC & CPCU. 


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