CHICAGO – Artificial intelligence technology like ChatGPT will quickly lead to radical improvements in insurance underwriting and claims management, insurance industry executives said.
Using AI to collect and analyze information will improve risk mitigation and enable insurers to take a more sophisticated approach to pricing, they said.
And the benefits will be so great that any efforts to slow the adoption of AI will likely fail.
Big language models like ChatGPT are not being used to change the business model of the insurance industry, but they will make current processes much more efficient, said Ericson Chan, Zurich-based chief information officer and digital officer at Zurich Insurance Co. Ltd.
He was speaking at the Insurance AI and Innovative Tech USA 2023 conference sponsored by Reuters News & Media Ltd. in Chicago last week.
The insurance industry already processes large amounts of information from claims documents, risk engineering reports and other documents, he said.
“For extracting the information from tens, hundreds or thousands of documents, these models are very efficient,”; Chan said.
For example, the models can structure information about specific buildings, specific risks and other factors from many different documents, he said, adding: “It will save enormous amounts of time.”
The models can also be used to update computer coding in the industry. For example, rather than training a developer on a piece of code that was used 20 years ago to enable him or her to update it to modern code, the models can very quickly translate the older code into a modern programming language, such as python , said Mr. Chan.
Programming projects that typically take a month can take half a day using large language models, he said. So-called 10x developers, who take one-tenth the time of average developers to complete a task, are highly sought after in the programming sector, he said.
“If we can do that with developers, what about adjusters? Can we have a 10x adjuster? Can we have a 10x underwriter?” he said. “It doesn’t change the business model, but it makes our current insurance business much more efficient.”
AI will also be used to eliminate weaknesses in the underwriting process, said Dan Abrahamsen, CEO of Cover Whale Insurance Solutions Inc., a New York-based insurtech managing general agent specializing in commercial trucking.
Cover Whale uses telemetry, or remote data collection, to collect driver behavior data and vehicle performance data from trucks it insures.
“We’re seeing results simply by engaging with our customer and identifying and trying to prevent high-risk driving,” Abrahamsen said.
The insurer can also use the data, in conjunction with traditional underwriting, to offer discounts to lower-risk drivers, he said.
By using AI to analyze data provided through technologies such as telemetry, insurers will be able to reduce human bias in underwriting, Abrahamsen said.
While the technology will replace some jobs in the insurance sector, its biggest impact will be in how it changes the jobs of many workers, he said.
“The scary thing for me is that it’s happening a lot faster than I think most people expect and it’s just going to continue. I think people are pretty bad at understanding exponential effects as a group,” he said.
But efforts to slow the adoption of AI, such as the recently opened letter signed by several technology executives asking for a six-month halt in AI research to establish safety protocols for the use of the technology, are unlikely to be successful, Mr. Abrahamsen said.
“I think it’s more of an arms race, and it will be treated that way,” he said.