How AI is Reshaping the Insurance Landscape
Artificial intelligence (AI) is rapidly changing the insurance industry, presenting significant opportunities for professionals to enhance their services and drive innovation. As Kathleen Birrane, US insurance regulatory practice leader at DLA Piper, noted in an interview with Insurance Business, AI is proving to be a “game changer for insurance companies.” The adoption of AI within the sector is growing, with many insurers already implementing it.
According to Danny Tobey, global chair of DLA Piper Americas AI and Data Analytics Practice, AI provides tools to help insurance companies stay in compliance with regulations while also helping minimize risk when writing policies. He asserts that early detection of potential issues can allow for proactive measures, like policy improvements or employee training.
A report by KPMG highlights AI’s potential to mitigate risk: “With enough training data, these algorithms can better analyse risk and predict outcomes, adding accuracy to risk models and pricing structures.”
AI is poised to boost economic growth and improve the insurance landscape as a whole. TechRadar reported that Generative AI alone could contribute up to $4.4 trillion to the global economy annually, with insurers anticipating gains in productivity, premium growth, and underwriting accuracy.
Benefits for Brokers
Generative AI technology can assist insurance companies with compliance and risk management, and it is also useful for brokers. According to Birrane, brokers can use AI to help clients with compliance and risk mitigation. She explains that brokers can identify potential risks and advise clients on actions they can take to mitigate those risks.
“This is an important tool in a broker’s box in order to make their clients aware of things that they can do to mitigate AI and other risks,” she adds.
Client-Side Integration
Birrane also emphasizes that clients can be advised to use AI to improve their risk profiles, making them more attractive to insurance companies. She explains that businesses buying insurance need to consider “their AI hygiene.” If a business uses AI effectively as a risk control mechanism, it becomes a “better risk” for the insurance company.
Strategic Implementation
Tobey suggests that companies should carefully consider AI adoption, emphasizing the importance of early risk detection and prevention. KPMG supports this view, advising that AI implementation requires careful planning, involving chief technology, chief finance officers, and senior leadership teams.
Despite the caution required, the potential of AI within the insurance industry is vast. Now is the time for insurance professionals to embrace and leverage available technological capabilities.
