Generative artificial intelligence (Gen AI) can create value for insurance companies across three main areas: increasing profitability and business growth, optimizing costs and streamlining operations, according to the Deloitte study Implications of generative AI for insurance.
Strategically targeted investments can help insurers identify untapped growth opportunities, improve their product offerings, and expand their market presence, thereby helping to increase profitability, the study shows. At the same time, by investing in Gen AI-driven solutions related to content creation for low-risk activities, insurers can reduce their expenses in certain functional areas and allocate resources more efficiently, which can lead to significant savings and increased operational efficiency.
In the operational area, Gen AI tools used to automate coding activities accelerate the software development life cycle and can generate productivity gains.
"Generative artificial intelligence can bring benefits across nearly all stages of the relationship between insurers and their customers, from product development and personalization and the sales process to risk assessment and claims management. The opportunity lies not only in automating certain activities, but also in using technology to process large volumes of information more efficiently and provide employees with tools that help them make better informed decisions and respond faster to customer needs. For insurers, this combination of efficiency, productivity and a more relevant customer experience can become an important source of value," said Ana Șerban, Actuarial and Insurance Solutions Director, Deloitte Romania.
Technology can also have benefits in preventing losses, the study shows. By analyzing information from multiple sources and formats, including claims data, IoT devices, video and text, claims history, and external factors such as weather conditions, Gen AI models can help insurers identify areas prone to loss and develop risk mitigation strategies.
Another area with potential is product and offering personalization. Gen AI can analyze information available across different customer touchpoints, together with data from other sources, to identify customer needs and generate personalized products or insurance coverage recommendations.
However, the adoption of Gen AI also brings challenges that need to be managed as the use of technology scales, the study shows. Misinformation generated by AI ("hallucinations"), deepfake content, phishing attacks and manipulation of models through malicious instructions (prompt injection), as well as the use of technology by malicious actors can create security vulnerabilities and affect customer trust.
"Careful risk management does not diminish the advantages of generative artificial intelligence but rather creates the conditions for organizations to be able to capitalize on them sustainably. Robust governance, constant monitoring of systems, transparency in decision-making and maintaining control over data and suppliers can strengthen the trust needed to scale the use of Gen AI. In this way, compliance and risk management can become enablers of innovation, allowing insurers to benefit from efficiency, productivity and services better tailored to customers, while keeping the human component where it is essential," said Andrada Tanase, Partner, Risk & Regulatory Advisory, Deloitte Romania.
To manage these challenges, the study recommends that insurers prioritize the ethical development of AI, use diverse and representative training data, constantly evaluate and audit systems through a robust governance model, and maintain transparency in decision-making.
It also recommends monitoring regulatory developments, periodically reviewing AI systems and external providers, and developing systems flexible enough to integrate future regulatory requirements, as well as to form multidisciplinary teams.
The Deloitte study Implications of generative AI for insurance analyzes the impact and opportunities generated by generative artificial intelligence in the insurance industry, including the main areas of value creation across different industry segments, as well as ecosystem opportunities, potential risks, and regulatory implications.
