As generative AI (Gen AI) continues to be adopted across the re/insurance sector, it is becoming more clear that the technology will be truly transformative for the industry. However, it appears that there is still a lot of foundational work that needs to be done, according to advisory firm, Oxbow Partners.
The organisation recently released a whitepaper, which explored how Gen AI will impact specialty and reinsurance markets. The whitepaper was authored by Miqdaad Versi, Partner, Head of Gen AI at Oxbow Partners.
Data and research from the whitepaper consists from interviews with senior leadership figures at 22 of the largest re/insurers and specialty players across the globe.
Referencing the specialty insurance and reinsurance markets, all participants agreed that Gen AI is going to be transformational in the longer term (5+ years).
For those who are not aware, Gen AI is a different variation of AI technology. Unlike previous evolutions, Gen AI can apply synthetic judgement to a range of inputs to generate new content such as datasets, scripts (including prose and computer code) or images.
However, whilst Gen AI is making headwinds across the sector, it appears that further progress is being held back by “other strategic objectives”
The report notes that all participating carriers are within the early stages of using Gen AI, with even the most advanced still only building “strategic foundations.”
It appears that the lack of of prioritisation perhaps partly explains why Gen AI is not expected to have a transformational impact in the next couple of years, and why it’s more expected to be within the next five-plus years.
Participants also cited data security, management focus, and underlying models not being ready, as specific barriers towards GenAI adoption.
It also appears that many firms are taking a deliberate “wait and see” position for now, making some investments in foundational capabilities, but scanning actively to see where others were making progress.
Oxbow Partners’ whitepaper also reveals that a majority of exec teams are excited about Gen AI’s potential, but want to see its proven benefits before they fully buy-in to the technology.
One of the biggest fears of adopting Gen AI appears to be the talent gap, with concerns of falling behind without the necessary expertise. To tackle this issue, some participants are using third parties whilst others are adapting recruitment, and almost all are training teams internally.
As well as this, all carriers that were surveyed have considered their approach to Gen AI governance. Some have moved further and already established formal AI & Gen AI governance committees. But, it appears that there is a general sense that GenAI-specific governance frameworks will have a short shelf-life given the pace at which the technology is moving.
Some carriers also called out the need to find the right level of governance “to prevent it becoming an inhibitor instead of an enabler.”
Miqdaad Versi, Partner, Head of Gen AI at Oxbow Partners and author of the report, commented: “The report backs up our hypothesis that Gen AI will be truly transformative for the industry. However, there is a lot of foundational work that must be done. Executive teams need to create a deliberate strategy for AI and Gen AI, consider how to set AI and Gen AI up in the business, and consider the AI and Gen AI angle on carriers’ transformation agendas and short-term priorities. We believe executives should think big, even if they are not yet ready to make the leap.”
Elizabeth Jenkin, Underwriting Director at the Lloyd’s Market Association, said: “Generative AI is one of the most talked about topics within the Lloyd’s market. It presents a unique opportunity for the specialty and reinsurance sectors to revolutionise their operations and products and while there are challenges to overcome, particularly around talent, governance and data, the potential benefits are substantial. It is crucial for the industry to lean into the discussions to stay competitive and innovative.”
