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How Insurance Companies Can Win the Race to AI Maturity | Insurance blog



Artificial intelligence has been around since the 1950s, but in recent years the business potential of AI has expanded dramatically. We now live in a world where big data and powerful computational capabilities allow AI to flourish. Businesses—including insurance companies—are investing in establishing data lakes, optimizing for cloud-based operations, and enabling AI for targeted analytics.

Insurance companies are seeing concrete results from their current AI initiatives. Our AI maturity research shows that carriers’ share of cost savings generated through AI more than doubled between 2018 and 2021. We predict that share will triple by 2024. In addition, insurance companies have been quite happy with the returns on their AI investments. 52 percent of insurers said the return on their AI initiatives exceeded their expectations, while only 3% said the return did not meet expectations.

But insurance companies are leaving value on the table. In our analysis of 77 insurance companies, we found that none of them were AI Achievers, which we define as companies that have a differentiated AI strategy and have operationalized AI to execute that strategy. In fact, most insurance companies are in the AI ​​Experiment category, representing those with the least mature AI strategies and lacking the ability to operationalize AI.

How insurance companies can win the race to AI maturity

Insurers can enter the Achiever category to realize greater value by leveraging AI to drive total business reinvention. This includes using AI in organization-wide decision-making and integrating AI into all parts of the business – from business process optimization to delivering redesigned products, services and experiences to customers.

Carriers looking to accelerate their AI investments can find opportunities in the front office and build out their next phase of growth. Our study explored three key front office use cases that I will dive into in this post: customer experience, product and service development, and sales and marketing.

Customer Experience Intelligence and Journey Automation

When it comes to optimizing customer experiences, insurance companies are starting to make progress compared to other industries – but they’re still in the early stages of AI enablement.

Many insurance companies have invested in developing a single view of the customer and have been able to understand which products customers own, if they have recently made a claim or if they have received a quote for another product.

While some insurers are beginning to gain a better understanding of the interactions they have with a given customer, most insurers struggle to connect the customer journey across multiple channels and touchpoints. Far fewer can use these insights to understand the breaking points in that experience and address them systematically.

While many insurers have invested in customer relationship management (CRM) platforms to share customer insights across the enterprise, few have layered AI to use those insights to orchestrate highly personalized customer experiences that span marketing, sales, service and claims. Leading CRM vendors are integrating AI capabilities into their platforms, making it easier to embed out-of-the-box AI models into any workflow. Choosing such a technology is a great opportunity to create omnichannel experiences and build a truly holistic view of each customer.

When it comes to automating parts of the customer journey, conversational AI remains a largely untapped opportunity for the insurance industry as a whole. Those who create autonomous call experiences that meet customer needs—rather than simply answering common questions or pointing customers to where to get help—generate higher levels of satisfaction with significant customer service cost savings and reduced reliance on a challenging labor market.

Development of new products and services

Recently, Accenture discovered that 88% of managers believe that their customers’ needs are changing faster than their company can keep up. Factors such as climate change and economic uncertainty are forcing customers to adapt to circumstances beyond their control, moving through territory as they try to make the decisions that are best for them. Our research revealed a need for companies to shift from focusing on the customer as consumer to developing a nuanced understanding of the customer as a multifaceted human being with complex and often contradictory desires.

This change from customer-centric to an approach we have coined “life centered is particularly relevant to carriers when developing products. AI can help carriers broaden their understanding of customer behavior and move beyond cookie-cutter customer profiles with data insights. It can help them build offerings that can be tailored to customers’ needs and habits as they move through life, seamlessly recommend or upgrade individuals’ products to respond to events like buying a new home, or provide coverage as climate change reshapes natural disaster risk.

There are plenty of opportunities for insurance companies to create new products and services that use AI to realize more value and deliver improved experiences. We are already seeing many carriers implementing AI into their car insurance products to assess driver behavior and offer pay-as-you-drive policies.

As IoT and wearable technology improves, operators will be able to use AI to gain an even deeper understanding of customer behaviors, meet their needs, and predict what their needs may be in the future. With a deeper understanding of the customer, carriers can build products with a higher degree of personalization, at scale.

My colleague Jim Bramblett have explored a few ways AI can provide another layer of protection for customers while collecting data on their risk profile and needs. One of the examples he discusses is an IoT-connected factory floor, where AI stops and starts machines as workers pass, notifies team members about parts that need maintenance, and enables them to see potential hazards via AR glasses.

Sales and market information, recommendations and process automation

Finally, operators can leverage AI to improve their sales and marketing results. Throughout the marketing and sales funnel, operators can implement AI to deliver the most relevant recommendations to customers and address their questions in the moment. For example, UK business insurance company Tapoly uses AI at every customer touchpoint to offer tailored commercial lines insurance products to its target market of SMEs and freelancers. They also use AI to optimize pricing and risk assessment based on customer data.

When customers want to talk directly to a live person, AI can improve efficiency the human to human experience and increase the likelihood of the client achieving the outcome they are looking for. Agents will benefit from more data and insights at their fingertips, meaning they can seize up- and cross-sell opportunities right now. Agents can rely on an AI assistant to pull up the most relevant information in real time and make recommendations when speaking to a prospect.

Sompo has also partnered with AI CRM company Vymo to build AI-enabled proactive sales coaching technology to improve the service their teams provide. Ping An has evolved a similar solution which serves up relevant customer data as well as real-time coaching that improves agent performance.

How insurers can become AI Achievers

In our latest report, The art of AI maturitywe identified five key areas that companies must invest in if they want to realize AI’s full potential and capture the value at stake.

  1. Ensure leadership is championing AI as a strategic priority for the entire organization. When it comes to transformation, everyone is a stakeholder. Leaders need to ensure their teams understand the value AI brings to their day-to-day tasks and the overall business goals.
  2. Invest heavily in talent to get more out of AI investments. Innovation comes from employing a diverse group of people to solve problems in unique and meaningful ways.
  3. Industrialize AI tools and teams to create an “AI Core”. To scale AI, carriers must create repeatable processes that create a strong foundation for increased innovation over time.
  4. Use AI responsibly, from the start. AI ethics and governance must be at the center of every AI initiative as carrier scale. Today, only 35% of consumers trust how AI is implemented by organizations. To retain customers, operators must demonstrate transparency and minimize bias.
  5. Plan long-term and short-term investments. There is no finish line when it comes to AI strategy and innovation. Customer needs will continue to evolve, as will AI capabilities. Those who plan ahead will be ahead when the need for adaptation increases.

AI’s potential in insurance is far from fully realized, but operators who take the initiative to build a strong AI program today will see a strong return on those investments. I’d love to discuss how you can better leverage AI in your front office, so don’t hesitate to contact me.


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Disclaimer: This content is provided for general information purposes and is not intended to be used as a substitute for consultation with our professional advisors.
Disclaimer: This document refers to trademarks owned by third parties. All such third-party marks belong to their respective owners. No sponsorship, endorsement or endorsement of this content by the owners of such marks is intended, expressed or implied.


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