AI’s Ascent: Transforming Insurance and Beyond
Artificial intelligence (AI) has evolved from a futuristic concept to a present-day force, rapidly changing industries worldwide. Its influence now extends to captive insurance, as highlighted in a recent panel discussion at the annual CICA conference in Tucson, Arizona.
Kayvon Deldar, vice president of partnerships at Voxel, noted that while AI isn’t new, “the sheer amount of money going into it and the innovations emerging as a result” are novel. He explained that AI has been present in everyday applications for years, from Netflix recommendations to voice assistants. The advent of generative AI, particularly ChatGPT, has further accelerated public interest and investment in the technology.
AI is now driving the development of new models and tools. One key area is the rise of AI agents, which serve as automated task managers, capable of handling complex workflows such as travel booking or insurance claims processing.
However, the panel stressed the importance of understanding AI’s limitations, as well. Dave Netti, senior vice president and director of risk services at Captive Resources, cautioned against viewing AI as infallible. He explained that AI models operate based on data patterns, thus making them susceptible to errors known as “hallucinations,” where they generate incorrect or misleading information. Netti also emphasized that AI is not a job replacement. While AI can handle repetitive tasks efficiently, it lacks the ability to interpret emotions, context, and non-verbal cues, which remain critical in many professional roles.
Another key limitation is the need for ongoing maintenance. Netti said “AI is not self-autonomous. You have to feed it information because we’re always evolving.” Without proper updates and oversight, AI models can quickly become outdated, which reduces their effectiveness.
Colin Donovan, president of STICO Mutual Insurance Company, RRG, outlined both the benefits and challenges of AI. Donovan stated, “The main benefit is the automation of repetitive tasks… it allows more room for creativity.” AI can streamline data entry, reduce human error, and improve decision-making. He gave the example of his company’s policy and claims management system, which uses AI to scan applications, pre-populate fields, and detect discrepancies in legal invoices.
Donovan also pointed out the challenges associated with AI adoption. He warned, “It’s only as smart as the data you provide,” highlighting the need for high-quality input data. Moreover, developing and maintaining AI systems can be expensive. Many businesses struggle to maximize their AI investments due to limited expertise in crafting effective AI prompts and queries.
Contract review is one of the most impactful areas where AI is gaining traction. As Netti described, AI is revolutionizing industries like construction, where companies deal with extensive legal documents. “AI can take that contract, review it against standard language, and provide a summary,” he explained, reducing labor-intensive processes.
Training and risk management also benefit from AI. AI-powered dashboards and telematics systems permit companies to tailor training for drivers based on their specific behaviors, and this personalised approach reduces accident rates and improves compliance.
Despite the challenges, AI is poised for continued expansion in business.. Donovan mentioned that his company is developing AI-driven policy comparison tools that will help insurers assess coverage differences against competitors. “From a marketing perspective, this could provide a lot of assistance,” he says.
The potential of AI is undeniable, but as the panel highlighted, businesses must take a balanced approach—leveraging its strengths while being mindful of its limitations. When implemented thoughtfully, AI can be a powerful tool for efficiency, innovation, and competitive advantage.
