Artificial intelligence (AI) is expected to alter several dimensions of the personal insurance industry, including customer onboarding (e.g. by powering customer service chatbots), pricing (e.g. by enabling more precise risk assessments) and claims management (e.g. by screening out fraudulent claims).
Looking further ahead, AI could one day enable insurers to offer novel forms of advisory services that help customers to live healthier and safer lives, for example by recommending safer driving routes or by flagging early signs of damage in the home.
The industry is still in the nascent stages of AI adoption. Incumbents have found it challenging to marry this technology with their legacy infrastructure, as well as to find the talent required to take forward innovation programmes. Yet insurance leaders are confident that AI will soon be embedded across their value chains.
Critics say that AI could lead to detrimental outcomes for customers, particularly where it allows or requires:
- the collection and sharing of large data troves, which could impinge on privacy if done without the express consent of customers
- hyper personalised risk assessments, which could leave some individuals ‘uninsurable’ by revealing previously unseen indicators of risk
- new forms of nudging, where insurers use AI to alter the behaviour of customers in a way that could be viewed as intrusive
However, insurers have a strong case for engaging in these activities. Using AI to produce more accurate risk assessments, for example, could make insurance products more accessible to individuals previously deemed too risky.