AI Enters The Insurance Industry

AI is entering the insurance industry.
Insurance may not be known as an early tech adopter, but the industry is embracing artificial intelligence—moved in part by the growing importance of cyber insurance.

Much like with other industries, such as law, the insurance industry is not widely known for readily adopting new technology. However, the adoption of technologies such as AI in more traditional industries like insurance is growing. 

More specifically, technological innovation in AI is transforming how businesses and industries can (and likely will) operate.

Recently, I moderated a panel at the 2023 PLUS Cyber Symposium. There was ample discussion of the concerns regarding AI, its uses in insurance, the ethics of AI and the value of human intelligence.

One incident stood out regarding how AI could impact the insurance industry. A former attendee and panelist could not attend the 2023 Symposium. Instead, he jokingly used a popular, three-lettered AI chat service (rhymes with cat-EPG) to create an artificial panel conversation. The AI chat service generated a conversation that simulated a panel discussion of the 2023 PLUS Cyber Symposium in a realistic manner.

The AI-generated panel discussion was then shared on social media. The engagement on the LinkedIn post was generally in good humor, but more than one person (myself included) was impressed by the accuracy of the AI chat service. The AI-generated discussion was up to date, informative and followed the normal formatting of a panel discussion (an individual even made the comment they felt as though they could have saved their ticket money). While the output was not perfect and lacked much of the fun banter of the actual panel, it was impressive.

AI is not new, but the more-developed consumer-facing iterations have dominated headlines recently. AI has been the topic of entire episodes of HBO’s Last Week Tonight with John Oliver, a CNN Special with Anderson Cooper and even made news for its insensitive use by organizations and universities to address difficult topics, like employee layoffs.

Naturally, there are questions surrounding the use of AI in insurance and other industries. Should industry professionals be concerned about losing their jobs to AI? How is AI used for insurance currently? What are the benefits and risks of using AI to reduce business vulnerabilities?  

AI for Insurance

It may come as a surprise to some that AI is already being used in insurance. Currently, AI is most often used for underwriting purposes, usually for small and predictable risk assessments. Underwriters assess an insurance applicant’s profile for risk to accurately determine what policy or policies are appropriate for the applicant. When done manually, the underwriting process can take days, if not longer, to complete. This is where AI plays a critical role.

AI helps increase efficiency by automating parts of the underwriting process that can free up personnel to focus on more nuanced and complex tasks.

AI-assisted underwriting can help by:

  • Assessing millions of data points for clearer risk visibility.
  • Employing real-time analytics to ensure that the most current data is analyzed. This includes zero-day vulnerabilities and related cyber trends.
  • Taking over repetitive and tedious underwriting tasks and freeing up expertise, preventing workload bottlenecks.

Cyber Insurance Is a Necessity, Not a Specialty

With new and ever-evolving data points, in many ways the web is still the Wild West. For cyber insurance, underwriting can be even more complex. But the capabilities of AI to analyze large data sets proves to be extremely helpful for cyber insurance underwriting.

In the past, cyber insurance was regarded as optional or specialty insurance for businesses (particularly small businesses). Today, every business has elements of a tech business whether they categorize themselves that way or not. 

Regardless of business size or type, almost all companies use technology to manage and market their products, often via their digital asset and content management systems. Moreover, every company depends on technology to conduct day-to-day operations. Cyber insurance is no longer specialty insurance—it is a business necessity. 

AI and Cybersecurity

As the frequency and sophistication of cyberattacks increase, the pressure on cyber experts and businesses to keep up with developing threats grows as well. 

AI can reduce a business’s vulnerability to threats through machine learning. AI can also learn quickly from large data points, including user behavior, to help evaluate risks within existing systems.

For example, AI can be used to monitor systems 24/7 for irregular activity by studying the behavior of a system’s users. We see some aspects of this technology with endpoint detection.

AI is used to detect login discrepancies that could be linked to a potential breach. By proactively securing systems with checks and alerts, businesses can prevent data loss or compromise to their organization.

AI Risks and the Value of People

Despite fears that technological innovations like AI and ChatGPT will eliminate jobs, in reality these technologies have the potential to assist and aid cybersecurity professionals in mitigating cyber risks.

What we are currently experiencing with the integration of AI within the insurance industry is simply the outcome of technological advancement. While some jobs may become obsolete, there will be new vocations created around the use of AI.

While AI is currently being used to increase the efficiency of tasks and processes, businesses still need people to fill the gaps left by AI, which, while still a useful tool, is not an all-encompassing solution. Another risk is the potential decline in the value of human intelligence. A business void of human integrity and skill is a risk. Technology should not be a replacement for individuals to think for themselves. Human creativity and insight are critical. Businesses should consider AI for specific tasks and not as a replacement for human creativity.

Also, just as AI can be used for efficiency and good, it can equally cause harm. There are numerous studies regarding inadvertent discrimination relating to dependence upon AI for resume reading and criminal identification. This further highlights the importance of the human factor in any business. There should always be a human check.

Predictions: Future of AI and Insurance

As AI develops and becomes more integrated in insurance, the customer and insurance professional interaction will most likely change. 

Some reports suggest that AI will take over insurance placements for predictable profiles, automatically adjusting policies while considering relevant variables, such traffic congestion and construction complications. AI might also take photos and information uploads of property damage. 

The relationship between underwriter and broker is poised to change dramatically over the coming years, especially when it comes to facilitating complex policies. Insurance industry professionals would be wise to work closely with AI-proficient colleagues as well as engage technology in the space to ensure that they are ahead of the game and using the most innovative solutions—while of course adding their own human expertise and experience—to meet customer needs.

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