AI and the Insurance Industry

by Adam R.

The insurance sector has a reputation for being resistant to change, I can clearly remember having a coffee with a contact of mine a few years ago who worked for a speciality risk insurer here in Dublin that also had a box in Lloyds.? She told me that on one visit to Lloyds, she saw an older underwriter for another firm who was still using a quill to sign his contracts, in the 21st Century!!

This resistance to change is quite at odds with what the insurance sector is built upon, the ability to forecast and manage future risks.?

Happily, this does not seem to be the case with the most recent technological disrupter to hit the market - the rise of AI.? Both EY and KPMG published papers in H1 of this year specifically on the impact of AI to the insurance sector and both found that leaders in insurance are grabbing the opportunities AI presents with both hands, this is a change that cannot and should not be resisted.

Key takeaways include:

1. Transformation and Innovation: Insurance companies are integrating AI to enhance risk management, customer interactions, and personalised services. This transformation involves centralising data and updating legacy systems to cloud-based architectures.
2. Current Use Cases: AI is already being used in risk modelling, data forecasting, claims handling, and contact centre operations. It helps simulate future scenarios, improve risk estimation accuracy, drive better pricing, and detect false claims.
3. AI Adoption and Trust: AI adoption is growing, with 99% of insurers already investing or intending to invest in AI and 52% of CEOs considering it the most important technology for achieving their goals in the next three years. A significant number of CEOs are confident in achieving returns on AI investments within five years.
4. Challenges and Risks: Despite its potential, AI adoption comes with challenges such as ethical issues, regulatory concerns, and cybersecurity threats. High-quality data is essential for effective AI implementation, and insurers need to manage data properly to meet regulatory standards and build trust.
5. Collaboration with InsurTechs: Collaboration between traditional insurers and InsurTech firms is crucial for fostering innovation and expanding coverage to underserved segments.
6. People and Culture: Innovation is driven by people with many companies building dedicated AI teams with direct links to the C-Suite (usually CTO/CIO). Insurance companies need to create a culture of innovation, invest in talent management, and encourage employees to adapt to new technologies. AI should be integrated alongside human colleagues to manage complex tasks and deliver additional value.
7. Best Practices and Recommendations for maximising AI benefits:

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Having begun his recruitment career in 2010 in the insurance sector, we are delighted to have Adam R. leading our insurance desk. At Fortis Recruitment, we are committed to your success and are here to support your career journey. Whether you are a candidate looking to advance your career or a client seeking top-tier talent, do not hesitate to contact Adam today at [email protected].