The P&C insurance market is under tremendous cost pressures. As such, insurance companies are looking for different ways to find efficiencies by automating parts of the process. However, when you automate a process, this usually means you reduce the human element and, historically, this has negatively impacted the customer experience. Customers get frustrated when something goes wrong, and they can’t speak to a human. This is because they don’t trust that technology will understand the situation in the same way that a human would. And in the past, this was broadly correct. But all this has changed with generative AI (Gen AI).

When Gen AI first reached mainstream recognition, it was billed as something that could revolutionize the world. After a while, people realized that Gen AI probably won’t in fact actually be taking over the world, at least not in the near future. However, Gen AI still does have a lot of potential, especially in the areas of automation.

Almost every conversation I’ve had with insurance executives these days involves Gen AI. They know that Gen AI has the potential to reduce manual effort, but they haven’t quite figured out how they can do this. I’ve been working with a number of insurance companies now where we have been able to implement Gen AI to make processes more efficient without sacrificing customer experience. One of the key areas I’ve found that Gen AI can be used is to supplement and supercharge the policy administration systems (PAS).

Policy administration

Customer service is a foundational element of the customer experience.  And customer experience is a key driver of the customer’s perception of the company and whether they want to keep doing business with that company. Gen AI can supplement the policy administration process by equipping customer service agents with timely and factual information so they can give their customers a more streamlined experience. This can cover things like policy inclusions and exclusions, policy limits, and other relevant data. One insurance company that I know of is using Gen AI to provide the weather conditions in the customer’s local area to help build the ever important rapport at the beginning of the conversation.

In this way, not only is Gen AI helping to automate and reducing the amount of effort required by customer service agents to get the relevant information, but it can also do so automatically, and in some cases pre-emptively. And the irony of this is that by using Gen AI to automate parts of the policy administration process, it actually can provide a more personalized and “human” experience while providing better customer service overall.

Mid-term amendments

Mid-term amendments (MTAs) are often performed by manual processes. Many insurers have been working on straight-through processing (STP) to make MTAs more efficient and to provide a quicker turnaround time. Previously, due to the sheer variability involved in MTAs, it was difficult to automate this process, whether in whole or in part. In the past, many had tried robotic process automation (RPA), especially where legacy technologies were involved, but they quickly realized that it proved very difficult to account for all the deviations from the happy path.

One of the key strengths of Gen AI is that it works off context instead of rigid rules. As such, Gen AI, if trained properly can be utilized to enable STP in a way that previously has been rather elusive. Gen AI, can understand what the MTA is requiring. For example with an auto policy, it can determine whether international coverage needs to be temporarily added, a new driver needs to be added to the policy, or the car has been sold and therefore the policy needs to be terminated. It can then automatically populate the relevant information into the PAS so the MTA can be actioned in a timely manner.

Policy renewals

Policy renewal is a time when insurance companies are most at risk of losing their customers. Many companies have automated this process and removed much of the friction, making it easy for customers to just let the policy auto-renew. However, for the price conscious shopper, this is an opportunity for them to shop around to see if there is a “better” deal out there.

Gen AI can be used to analyze the interactions the customer has, monitor the trends in the overall industry (e.g. are premiums generally increasing or decreasing), and assess the overall public sentiment of the brand. It can then take all this information and use it to assess and identify the likelihood of the customer renewing or cancelling their policy. And if the customer is likely to cancel their policy, then Gen AI can suggest the best options in which to retain the customer. Some of these recommendations could include things like reducing the premium by 2.78%, including flood coverage for only $10 more per month, or something more random such as suggesting to send them a congratulations card when their favorite sports team just won a championship.

Closing thoughts

While there’s no longer talk about Gen AI taking over the world, there is still a place for it in today’s insurance environment, especially in helping to supercharge the PAS. Gen AI, if done correctly, can help provide a more personalized customer experience, enable STP, and reduce policy cancellations, all the while doing this more efficiently and effectively. And while it’s sometimes difficult to separate the hyperbole from reality, the true power of Gen AI is in identifying the right use cases for it where it can truly shine.