Insurers Face Divided Regulator Response To AI Use Risks Law360 Insurance Authority

Although GIS systems have been present in insurance for decades, only the recent development of AI has made the practical use of the big data sets possible. Although the international expansion in insurance is constrained by local regulations, the current technological revolution has already led to an even faster consolidation. The insurance industry has experienced an increased M&A activity in recent years, and AI development as well as the pandemic could increase the trend.

According to the CII’s latest Public Trust Index, professional brokers outperform price comparison websites, banks, building societies and insurers when it comes to building customer loyalty and confidence. This reinforces that it is the broker that can make the real difference in customer experience, and any decisions on AI should be in service of that unique differentiator, first and foremost. Insurance professionals will be looking for ways to use AI in customer service, underwriting, pricing, and sales. The benefits are so prominent that an additional 41% of agents surveyed plan to adopt AI for their business in the next six months, according to Nationwide. Furthermore, 77% reported considering using AI technology to help develop council for their clients, a 15-point jump from 2023. The world of artificial intelligence (AI) continues to evolve rapidly, and generative AI in particular has sparked universal interest.

Over time, insurance companies will have every incentive to make the models more and more unforgiving, threatening more Americans with loss of coverage and potentially driving millions or billions of dollars’ worth of unnecessary home repairs. And as insurers face increasing losses due to the climate crisis and inflation, the pressure to push unnecessary preventive repairs on customers will only rise. Face-to-face interactions between insurance agents and customers are no longer necessary. For businesses that are just starting out, a broker’s ability to use data and newer underwriting models to argue with carriers for coverage is a boon.

Startups were pitching tools that streamlined brokerage operations and improved customer service. They pitched data analytic systems that could help a broker grow their business and develop their expertise. Independent Agents (IAs) attitudes towards technologies like machine learning and generative artificial intelligence (AI) are changing.

Brokers can harness Salesforce predictive AI to help understand client needs, whether it is a policy renewal or a cross-sell opportunity with pre-filled templates. Miller has deployed Einstein Prompt Builder so that its team can use or create prompts to quickly produce complex insurance quotes and solutions for clients. Research by Salesforce also found that 68 percent of workers believe generative AI will help them improve their customer service, which Salesforce’s Einstein can offer. Despite the growing juggernaut of national brokers, it seems easier to start an insurance agency now compared to 50 years ago. Acquisitions were the growth strategy for the national (publicly traded) brokers. Private equity (PE) money realized the insurance industry was lucrative and jumped in with both feet.

Gallagher report reveals the growing risks heat waves and air pollution pose to the health and safety of outdoor workers. For an individual insurer, the technology could increase revenues by 15% to 20% and reduce costs by 5% to 15%. The platform reads and compares policy documents across more than 300 checkpoints to identify any variations with the policy itself using fuzzy matching logic. “The software enables you to look at specific and relevant issues flagged up in the policy rather than having to trawl through 300 pages of a document,” said Vikash Kaul, CTO at EPIC Insurance Brokers and Consultants.

Explore the evolving role of AI in the insurance industry

As the firm builds AI capabilities, it can focus on higher-value, more integrated, sophisticated solutions that redefine business processes and change the role of agents and employees. At least 40 states have introduced or passed legislation on AI regulation in 2024, with a half-dozen measures related specifically to the health-care industry, according to the National Conference of State Legislatures. A common focus of the health-specific bills has been greater oversight on insurers’ use of AI tools to expedite coverage decisions. Lawmakers in California are working to join other states regulating health insurers’ use of artificial intelligence tools in coverage decisions. With the advent of Artificial Intelligence (AI), players in insurance are experiencing a transformational shift in how they operate, manage risks, and serve their clients. AI is a powerful tool that can streamline processes, enhance decision-making, and ultimately drive efficiency and profitability.

Companjon’s unique position as a licensed and regulated digital insurer enables it to act as both underwriter and broker. In 2023, Companjon announced its partnership with bunq, one of the leading EU neobanks. In the rapidly evolving technology landscape, insurtech companies have remained significantly underinvested compared to more prominent industries such as fintech or healthcare. This underinvestment represents a staggering $6 trillion opportunity for the global insurance industry, as indicated by Dealroom. Over recent years, traditional insurance providers have fallen behind in adopting data science solutions, creating a void for technology-driven firms to fill the gap in the sector. Between inflation, rising interest rates, geopolitical tensions, and growing recession concerns, 2022 was a year of reckoning for both public and private markets.

That would give agents a holistic view of a customer’s insurance and wealth profile, which would give the agent an edge in providing advice and pitching products. Three other initiatives are in the works, including a bot that will automatically listen to and score all call center interactions to track employee performance. The agency is also building out technologyrobots to make policy documents searchable and update those if necessary with new federal guidelines, as well as creating an interface to answer employees’ policy-related questions. “We’re really looking primarily at AI as offering a supplement to our call center agents, which is not intended to replace customer service, but is intended to provide more responsive customer service to customers with basic needs,” Cook said. The virtual AI agent is able to assist callers with basic questions, such as wanting to get in touch with an insurance agent, allowing employees to focus on the more complex inquiries.

However, the insurance industry is notoriously slow in adopting new technologies due to regulatory constraints and legacy systems. While the technology appears promising, investors should watch for actual client adoption rates and revenue generation chatbot for insurance agents metrics in upcoming quarters to gauge true market impact. The companies on our list have seized the opportunity to fill the void left by traditional insurers, offering personalized, efficient, and transparent services to businesses and consumers.

As the class-action lawsuit nears, that damage only stands to grow more widespread and more difficult to prescribe a tangible dollar amount. The results suggest that AI can significantly enhance contact management in the insurance sector, potentially mitigating challenges like those faced by State Farm. Danny Fang (pictured below), senior IT manager at Lemonade, will give the insurtech’s perspective at the webinar.

In 2022, Steadily entered a partnership with TurboTenant, a leading property management and accounting software trusted by over 440,000 landlords across the US. This integration complements TurboTenant’s robust suite of tools, including marketing, rental applications, lease agreements, rent payments, and expense tracking, further streamlining landlord finances. In addition, Salesforce also believes that these efficiency-boosting features will help insurance brokerages to “deepen their client relationships,” as well as assisting with recognizing potential retention risks and identifying coverage gaps. The partnership also ensures that clients have access to cutting-edge risk management solutions, empowering them to deploy AI technologies with confidence. Phoenix Ko, co-founder and head of business development, says customers are more likely to trust ChatGPT than an agent because people know that agents are biased in how they select products. ChatGPT, because of its natural tone and unscripted fluidity, can influence users.

IBM watsonx Platform: Compliance obligations to controls mapping

The insurance industry has long been courted by AI and machine learning technologies, but much of that attention has been directed toward carriers, which can use technology to improve their underwriting performance. AI specialists OpenDialog have partnered with OpenGI to deliver conversational AI agents to its customers, creating efficiency gains for brokers by automating customer service interactions. The new partnership will allow Open GI’s broker customers to create customer-facing chatbot solutions using generative AI for the first time, creating a more conversational experience for their customers. It also enables brokers to check policies, compare quotes and analyze data, to meet their clients’ ever-changing needs. The suite of insurance policy management software, which integrates with different agency management systems, is the first of its kind to address the ongoing problems of manual processing, employee overload, increased expenses, and broker E&O claims.

IBM’s rivals, including Microsoft, have bet big on such a move, although analysts and traders have hinted at the AI bubble potentially popping in the not-too-distant future. Or perhaps Big Blue could simply listen to customers, only 29 percent of whom are comfortable with generative AI agents providing service, according to IBM’s figures. The study is based on a survey of 1,000 insurance c-suite executives and 4,700 insurance customers. CEOs in the survey were evenly decided on whether generative AI was a risk versus an opportunity although 77 percent who responded said generative AI was necessary to compete. The idea is not, however, to leave actual product choices to ChatGPT – which first of all is not a licensed broker (although one day…). Rather, the conversation would end in the app recommending the customer to an agent, who would come armed with the chatbot’s insights about the customer’s needs.

Insurance models are shifting from traditional purchase and renewal to continuous coverage, dynamically aligning with users’ lifestyles. Micro coverage options for specific needs, like phone battery or flight delay insurance, allow for personalized policy bundles. With the rise of the sharing economy, UBI is adapting, offering pay-per-use models for shared assets like cars and homes.

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Personal auto coverage for self-driving cars will have no or limited liability coverage. Smart devices in homes and businesses are providing real-time risk data that essentially creates individual risk assessment (versus pooled risk assessment). OpenDialog specialises in collaborating with regulated industries to develop AI agents that can comprehend end users intentions through natural language, leveraging the world’s most advanced Generative AI and ChatGPT Large Language Models. The OpenDialog technology seamlessly facilitates communication between end users, brokers, and insurers, automating routine processes throughout the entire policy lifecycle. The technology can support all business functions including marketing, quoting, claims and renewals. Muddu Sudhakar, cofounder and CEO of generative AI platform Aisera, said that insurance companies are also using generative AI to improve risk assessment.

• The platform simplifies the online application process, offering automated claims management tools coupled with personalized customer service.
• Dr Björn Holste was Managing Director at Deutsche Bank and Prime Capital, Executive Director at UBS, and a previous Fintech founder in AI-based portfolio optimisation and quantitative risk evaluation.
• They have the potential to automate processes, enhance customer experiences and streamline claims management, ultimately driving efficiency and effectiveness across the industry.
• Chris Raimondo, insurance technology leader at EY Americas, worked with a personal lines insurance carrier that integrated generative AI into its customer contact center.

The competitive landscape is increasingly crowded with AI solutions targeting the insurance sector. While Roadzen’s focus on vertical-specific applications is strategic, success will depend on their ability to demonstrate clear ROI to potential clients and secure major insurance partners. Current market conditions suggest cautious optimism, but more concrete business metrics are needed to assess the actual impact on shareholder value. The company boasts a 100% cloud-based technology capable of processing 32,000 policies per second, offering customizable product design and seamless connectivity with third party data sources.

Shift to digital distribution and self-service

And even though Travelers has flown tens of thousands of drone flights, are those not part of underwriting? And if AI and drones aren’t actually affecting customers, why file so many patent applications like “Systems and Methods for Artificial Intelligence (AI) Roof Deterioration Analysis”? It felt like the company was trying to have it both ways, boasting about using the latest and greatest tech while avoiding accountability for errors.

As insurers begin to adopt this technology, they must do so with a focus on manageable use cases. The transformative power of this technology holds enormous potential for companies seeking to lead innovation in the insurance industry. Amid an ever-evolving competitive landscape, staying ahead of the curve is essential to meet customer expectations and navigate emerging challenges.

A recent IVANS survey found that 83% of agents reported they would write more business with a carrier if that carrier provided real-time appetite and quoting within their management systems. How fast a carrier turns around a quote directly influences how much business that carrier might receive from an agent, the survey revealed. According to Tony Caldwell, author, speaker and mentor to independent insurance agencies (and regular columnist in Insurance Journal), 2024 will be a year where agents will need to play defense more than ever before. Bills in New York and Pennsylvania would mandate insurers disclose to providers and individuals when AI is used. At least 11 states have also issued broad guidance on AI standards in health insurance based on a model released in December by the National Association of Insurance Commissioners.

Xaver unveils AI platform for life Insurance and pensions and secures €5M Pre-Seed

You can foun additiona information about ai customer service and artificial intelligence and NLP. Wetzel and Edmonds recommended that agents work with a cybersecurity consultant to assess their vulnerabilities and develop safeguards to prevent getting hacked or to minimize damage. Multiple steps need to be taken, and old-school computer scans are no longer enough. Those were some of the major points outlined last week by Thomas Wetzel, an AI and cybersecurity consultant and educator for the insurance industry. He spoke to a packed meeting room at the Florida Association of Insurance Agents’ annual convention in Orlando. Company culture, as Guild mentioned, is more than an internal commitment; it’s something that can also drive business relationships.

However, the report warns of new risks emerging with the use of this nascent technology, such as hallucination, data provenance, misinformation, toxicity, and intellectual property ownership. To improve productivity and the claims experience, insurers will need to scale up the most promising initiatives. While generative AI is still in early days, insurers cannot afford to wait on the sidelines for another year.

Visa’s involvement and additional layer of authentication also provides participating P2P platforms with some amount of fraud detection and securityIt also allows the company to strategically sit  in the middle of all P2P transactions. This scenario can also potentially extend to cross-border use cases; for example, a user of a wallet that operates in the U.S. could send money to a Visa+ user in Kenya, even if the two wallets didn’t do cross-border payments. An IBM study has found most insurance industry leaders believe generative AI is essential to keep pace with competitors.

Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise. For a company with a $65.7M market cap, this product launch could be transformative if successfully monetized. The insurance industry’s global customer service market represents a multi-billion dollar opportunity. However, the announcement lacks important details about pricing models, existing customer commitments, or revenue projections. The platform’s core strengths lie in its vertical-specific focus and comprehensive workflow automation capabilities.

Only 17% of agents said they trust AI, 25% of those surveyed said they see AI as an opportunity, 27% said they view AI as a threat. About half, 49% of respondents said they were neutral about whether AI is more of a threat or an opportunity. Six percent of principals surveyed said they have implemented AI into their agency and 36% said they are likely to use AI in their business within the next five years, according to the study. Asking the better questions that unlock new answers to the working world’s most complex issues.

Nick holds an MS in Management from Troy University and has earned several professional analytics certificates, including from the Wharton School. While using AI applications offers a wealth of benefits, some insurance firms are approaching the technology with cautious optimism. The aim is to impart practical insights, actionable strategies, and best practices for leveraging Slack to drive productivity and innovation in the insurance industry. “With Salesforce allowing us to drive productivity gains and streamline processes, AI is forming the bedrock of our success and positioning us as a market leader.

Establish guardrails on what information can be put into the systems and what must be left out, such as personal identification info. The technology will augment insurance agents’ capabilities and help customers self-serve for simpler transactions. The EvolutionIQ platform harnesses the potential of analytics, predictive modeling, mobile technology, cloud computing, and big data insights combined with AI. This approach aims to seamlessly integrate non-traditional data sources, such as social media content and internal system logs, with conventional databases like financial systems and customer case histories. In 2022, the Arizona-based insurance software company acquired Neoteric Agent, a video proposal creation tool for insurance agents. This acquisition further solidifies Better Agency’s commitment to solve challenges facing insurance professionals.

Sign up for commentary and analysis on recent news, and compelling trends in the fintech space. AI has helped to accelerate the move to personalized marketing, as it automates the processes involved in generating personalized campaigns. Olivo uses multimodal AI, a branch of AI in which multiple types of information transmission, such as text, voice, and images, are used to train algorithms to better understand consumer interactions. Koïos reported that 75 percent of survey respondents expect a response from an agent in less than five minutes, and that 65 percent of consumers prefer online platforms when shopping for insurance.

SageSure and Auros partner to expand homeowners’ insurance options in Louisiana and Mississippi

Still, these tools have potential to help brokers streamline the process of selling insurance to small, middle market and newer businesses. For young brokers, these tools are the future of breaking into the business and building a book, which translates into building a long-term, sustainable career in the industry. The focus on Customer Experience in insurance has never been as sharp post-COVID as now. Yes, we hear narratives around how AI has an important role, but we also see reinforced – again and again – the unique position of the broker with retail customers coming to the fore again.

In this article, we delve into how retailers, wholesalers, and MGAs can use AI to harness its capabilities effectively. Previously, contact center vendors have termed this very differently – bots, virtual assistants, intelligent virtual agents, etc. While all of these are AI-driven, they were not referred to – or considered as agents. Their ChatGPT App role is to support human agents – take on simple workflows or handle routine customer inquiries – not to be agents, handling customer inquiries directly in an autonomous fashion. Xaver’s leadership team has significant experience in financial services, entrepreneurship, and AI and is familiar with building and managing regulated companies.

Cybersecurity is a service, requiring constant updates, not a once-a-year product, the consultants said. Those services, including in-house information technology departments, must immediately make patches to fix software vulnerabilities when alerted to the issue. “They’re looking for something cohesive or complementary from a training pathway and an adoption perspective.” Clear communication, a strong relationship and emphasis on sustainability are just the start. Their insurance partners should strive to understand their business, identify areas of concern and craft coverage customized to meet their needs.

The issue is a growing population gap since the generation in-between, Generation X is smaller than both the Baby Boomer and Millennial groups. So, people in their 60s will be replaced by people in their 20s because there is a lack of people in their 40s and 50s. Typically, the new franchisee will pay an initial franchise fee (often $25,000 or more), and then the commissions are paid to the franchisee at a lower rate to offset the support cost. These options also have the benefit of operating a small agency while being part of a larger organization. When the internet was becoming popular, many thought that direct-to-consumer (DTC) sales would become standard; however, adults at that time were slow to adapt. Young adults today grew up with the internet and expect the ability to get everything directly on the internet.

The PoC shows the increased personalization of response to insurance product queries when generative AI capabilities are used. When it comes to artificial intelligence’s use of intellectual property and personal identifiable information, the technology may be new but the underlying legal and risk management principles that govern it are not. Insureds can apply for and receive insurance entirely online, or they can pick up the phone and speak with their broker. The flexibility of these digital tools is appealing to business owners of all ages. Try things that won’t affect the business too widely in a sensible and staged way.

According to new survey data from Nationwide, more agents and agencies are incorporating those technologies to help meet their clients’ ever-changing needs. The AI Agents are expected to save Open GI brokers both money and time as they free up human agents to work on more complex issues and streamline the process for simpler scenarios. Open GI will offer its brokers access to OpenDialog’s state-of-the-art generative AI chatbots via its policy administration (PAS) platforms. AI helps integrate and standardize this data to better account for soil and crop health differences, including yield potential influenced by factors like soil type, climate and agricultural practices.

Travelers may have invested huge sums in neural networks and drones, but it apparently never updated its billing software to reliably handle the basics. While there’s no way to know exactly how many other Travelers customers have been targeted by the company’s surveillance program, I’m certainly not the first. In February, Boston’s ABC affiliate reported on a customer who was threatened with nonrenewal if she didn’t replace her roof. The roof was well within its life expectancy, and the customer hadn’t encountered any issues with leaks; still, she was told that without a roof replacement she wouldn’t be insured. She said she faced a $30,000 bill to replace a slate roof that experts estimated could have lasted another 70 years.