Gallagher Re, a reinsurance broker, highlights AI as a major focus of the InsurTech narrative in 2023, marking a turning point where AI gained serious traction in the re/insurance industry.
According to data from Google, there has been exponential growth in AI interest across all industries since early 2023, peaking later in the year.
Although AI has been around since 1956, recent years have seen significant advancements, making it a rapidly evolving field with widespread applications.
In a recent report, Gallagher Re explores AI’s potential impact on insurance and reinsurance, particularly within InsurTech, focusing on its practical applications across the value chain: distribution, pricing/underwriting, business operations, and claims processes.
Firstly, Gallagher Re’s report suggests AI could drive growth by enhancing distribution channels. As consumer spending hesitancy rises, AI becomes crucial for tailoring offers to individual customers and selecting the most effective distribution channels, optimising outreach, increasing acceptance rates, revenue, and market expansion while cutting expenses.
Innovative underwriting and pricing techniques are critical for maintaining a combined ratio below 100%. AI platforms enable closer collaboration between insurers and customers, delivering unique experiences and tailored premiums based on individual risk profiles. Real-time pricing, informed by usage data and risk assessment, streamlines processes and improves capital efficiency.
AI-driven InsurTech firms like SEND, ProNavigator, and Federato are reshaping operational platforms, exemplified by SEND’s Underwriting Workbench, which streamlines various processes, enhances workflow tracking, eliminates redundant tasks, and accelerates underwriting procedures.
Claims management benefits significantly from AI integration, improving customer service, fraud detection, and workflow management. Shift Technologies and Sprout.ai lead in claims fraud detection, empowering re/insurers with detailed insights and decision support for seamless claims experiences across multiple channels.
However, Gallagher Re concludes that despite the potential, challenges remain due to inconsistent and low-quality data in legacy systems. It’s crucial to clearly articulate AI’s value proposition for each part of the value chain and monitor progress in core business practices to understand its true impact.
