AI’s Influence on Life Insurance: An Interview with Brett Laker
In the ever-evolving landscape of the insurance industry, artificial intelligence is rapidly changing the way businesses operate. From gathering and analyzing vast amounts of data to speeding up decision-making processes, AI’s influence is undeniable. In particular, the life insurance sector is experiencing major shifts, with technology playing a pivotal role in how carriers assess risk and deliver services. This is especially true as the industry moves from weeks-long underwriting processes to decisions made in hours.
To delve deeper into these developments, Patti Harman, the editor-in-chief of Digital Insurance, spoke with Brett Laker, head of North America for Underwrite Me, to discuss the current and future impacts of AI in the life insurance arena.
“I do see people using life insurance more in the financial space, and I think that a majority of the sales that, at least with companies that I’ve worked for and worked with, they are for around financial reasons, not just that debt benefit coverage.” — Brett Laker
Historical Context of Life Insurance
Laker began by providing some perspective on the sector’s evolution. While he noted that life insurance sales have been relatively stagnant, particularly in the U.S., over the past decade, he acknowledged that numerous factors contribute to this trend. These include economic conditions, interest rates, and buying behaviors. He highlighted that the traditional method used to sell life insurance relied on personal interaction. Laker shared his view that the underwriting process, although crucial, can be a point of friction. The process has been made easier using technology in ways like direct-to-consumer options, agent-driven e-applications, and accelerated programs.
The Role of Technology and AI
Harman and Laker discussed the advantages that AI brings to life insurance. Laker pointed out that AI and machine learning models are invaluable for risk assessment, analyzing individual data, and evaluating applicant honesty. He noted the significance of data products from exam labs to prescription histories to motor vehicle records. These products are then incorporated into predictive models.
Impact on Customer Experience and Future Trends
Regarding their application, Laker described a vision of AI improving customer experience. AI could improve the customer’s involvement with life insurance businesses, potentially starting the cycle of better living with the customer, keeping them front and center with engagement, and ultimately resulting in a better mortality output. Laker emphasized that the primary objective should be to increase sales by enhancing the customer experience. He also noted the importance of the underwriting process in this context.
Addressing Concerns and Looking Ahead
Laker expressed concerns about a “fear of missing out” (FOMO), suggesting that companies may adopt AI too rapidly without fully understanding the implications. He mentioned that the insurance industry is heavily regulated, which has created a stable but more reserved approach to technology adoption than other financial sectors. Nonetheless, he finds the potential of AI to be transformative, particularly in its capacity to organize and analyze large datasets. Laker also expressed his worries about the possibility of machine learning making decisions.
Looking ahead, Laker anticipates incremental improvements rather than complete upheavals in the market. He indicated his belief that regulations will prevent radical changes and that there must be transparency and explainability in the decision-making process. He also stated that the focus should remain on refining existing processes, ensuring that the industry operates with a clear purpose.
As the conversation closed, Laker highlighted that the underwriting tools currently in use will be critical in using innovative technologies. As the industry embraces and invests in technology, he is optimistic about the growth of life insurance.
