7 Ways AI Will Impact the Insurance Industry in 2023

Our Convr team is seeing rapid adoption of artificial intelligence (AI) within the insurance industry. Providers are realizing the power of AI-powered risk modeling that delivers better risk decisions, streamlined risk decision-making and optimized underwriting–with faster quote-to-market.

In 2023, expect the proliferation of AI to continue across all facets of the industry, with the greatest impact in seven key areas.

1. Productivity driver

More volume and quicker straight-through processing are what insurance providers want. In 2023, expect a greater use of AI to improve the stitching together of key but disparate data silos, submission-to-quote processes, the digitization of submissions, the structuring of the documents and preparation of information. All of this enables underwriters to access and leverage data easily and means new business can be analyzed more properly.

1. Understanding catastrophic risk?

Pricing catastrophic risk due to weather or climate change is top of mind in 2023. With weather patterns changing, it is increasingly more difficult for insurers to price catastrophic type risk. We will continue to see private and commercial insurers back away from taking on those risks–particularly in coastal areas–with state governments stepping in with raised taxes and raised insurance rates to cover the risk. This is already happening in Florida where premiums have spiked.

We will see environmental, social and governance concerns playing an increasing role–for example the use of drones to evaluate risk over a large geographic area. When talking drones, that means sensors feeding massively more amounts of data, and further underscores the need for advanced, precise modeling that can handle the exponentially larger and unprecedented amounts of data.

1. Underpin new line of businesses, claims pricing

Carriers will increasingly rely on AI to analyze the influx of new line-of-business and use cases; for example, cyber-related risk. What are the mechanics of processing that type of submission? What if the client is In Dubai? How can carriers analyze and then enrich that data, so underwriting teams can more properly assess it? Expect to see an increased use of AI to underwrite claims pricing, as a slew of AI applications across underwriting, pricing and claims have become newly available.

1. Reduce underwriting business burnout

Expect adoption of AI to automate the manual and tedious but critical key tasks that cause long work weekends for underwriters. This, in turn, will reduce the burnout crisis facing underwriting teams and help mitigate the ongoing talent shortage.

1. Resource gaps filled

The past five years in particular saw a growing number of insurance technology vendors fill a specific resource gap – such as risk analytics for underwriting. From a post-pandemic context - with many quitting and not returning to the workforce – we’ll increasingly see the combination of AI technology plus human interaction to manage and automate low-level or repetitive tasks.

1. Outside-the-box talent acquisition

Expect carriers to continue creating large internship programs as a mechanism to introduce new and younger talent to the industry, and to showcase innovative technology and new applications that combine actuarial practices and data science. Expansion of digital recruitment will continue, targeting a broader talent pool beyond college graduates and those wanting to enter insurance programs. For example, digital recruitment can be used to recruit talent who may be drawn to a career training program but had not seriously considered working in?the insurance industry.

1. More outsourced AI

Look for increased outsourcing of AI development and projects. There aren’t enough information technology resources available in the industry–especially within advanced technologies such as data science–to build the required products and the internal systems typically built in-house. We’re hearing about in-house projects that have stalled after 18 months, even two years into development due to the complexities and lack of critical technical knowledge and talent these undertakings require to operate.

To hear more about how Convr's d3 Underwriting Platform can solve for your commercial P&C insurance underwriting team's troubles–visit convr.com.

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