LAS VEGAS — The insurance industry has been quietly deploying artificial intelligence, in some cases for years, and its use is increasing as the technology matures rapidly.
AI has been used nearly everywhere, from enhancing efficiency in routine processes to refining customer interactions and experiences, sources said in interviews at the 2024 InsureTech Connect conference in Las Vegas last week.
AI has been central to CoreLogic Inc.’s operations for a long time, said Jesse Herrera, San Diego-based executive vice president, global products and operations, insurance solutions, for the data analytics and catastrophe modeling company.
“It didn’t start with Chat GPT for us,” he said.
Among the “compelling and interesting use cases” for which AI has been deployed is in structuring and sifting large amounts of raw data and analyzing imagery from various sources, Mr. Herrera said.
San Francisco-based CyberCube Inc., which builds models to help quantify cyber exposures for brokers, insurers, reinsurers and others, has used AI since the company’s inception and employed Open AI models and application program interfaces since 2021, said CEO Pascal Millaire.
CyberCube began as a division of leading cyber security firm Symantec nine years ago as a resource for the insurance industry. The company was the lead modeler on three of the four cyber catastrophe bonds issued in 2023 as capital markets were tapped for the first time for commercial cyber insurance capacity.
“AI is very, very relevant to insurance because insurance is an extremely data-oriented industry. It runs on data,” said Prashanth Kulkarni, Boston-based senior vice president for NTT Data, the technology and consulting arm of Japanese telecom giant NTT Corp. He added that the company is restructuring to target growth in North America over the next several years.
Artificial intelligence is a “powerful framework and technology to harness data very efficiently and then give incremental benefits,” Mr. Kulkarni said, including customer interactions. “It’s going to help in the customer experience.”
AI seamlessly combines customer contact channels from instant messaging to live conversations, said Atlanta-based Ken Tolson, CEO of Turvi, Crawford & Co.’s digital solutions group, which launched Oct. 14 to provide SaaS products to insurance industry customers. Mr. Tolson had previously been CEO, digital solutions, at parent Crawford.
“You have to be able to meet the customer where they want to be met, whether they want to engage digitally or they want to engage via natural language,” he said.
Using AI, “we can very easily weave between an SMS type of engagement or responsive web type of engagement. We can communicate with them through AI-based natural language processing, too,” Mr. Tolson said.
In addition, Turvi is testing its Cover AI SaaS offering with half a dozen insurance industry partners before the product goes to production launch this month, Mr. Tolson said. The technology will help “ingest” policy language and parameters to help determine if a claim is coverable, he said.
Each client, including insurers, will adopt and deploy the product in a slightly different way based on its use case and system architecture, Mr. Tolson said, but most will likely route it toward brokers through a web portal.
Insurance industry urged to maintain the human touch
Commercial insurers and others in the sector are deploying artificial intelligence to meet various challenges, from process automation to ingesting data for underwriting.
The progress they are making, however, must be tempered by keeping humans in the loop for all operations and not ceding too much autonomy to the technology, according to a panel of industry experts who spoke last month at the annual InsurtechConnect conference.
Mojgan Lefebvre, Boston-based chief technology & operations officer for Travelers Cos. Inc., said the insurance sector has been using artificial intelligence “for years,” but that use has recently increased dramatically, including in underwriting.
“What’s happened over the past couple of years … the exponential nature of it is just incredible. We’ve been using it in predictive analytics, pricing and all of that, and now it has found its way into customer service and underwriting,” Ms. Lefebvre said.
AI can perform routine, repetitive tasks like document searches and image processing much faster than humans and is being used to help ingest information during the underwriting process. The focus is on “automating anything that’s routine so that we can let our underwriters focus on their expertise,” Ms. Lefebvre said.
“It means the world of possibilities for insurance changes. … It is an exciting time,” Gary Hoberman, New York-based CEO and founder of technology company Unqork Inc., said of the numerous possibilities for AI to improve efficiencies in insurance.
Byron Clymer, Kansas City, Missouri-based chief information officer for Lockton Cos. LLC, agreed that while AI can be a powerful tool to import data for underwriting purposes, “you have to have a human ensure that what you’re bringing in is 100% what was put in that contract. … It’s a legal document.”
“Words matter,” Mr. Clymer said. “The difference between a translated “and” or “an” can mean that something is covered or it’s not covered, so we still have the human in the loop to validate that what was brought in is accurate.”
Chuck Wallace, San Francisco-based CEO and co-founder of commercial auto insurer High Definition Vehicle Insurance, said artificial intelligence is particularly useful in integrating the mountain of telematics data generated through HDVI’s truck insurance activities together with additional documentation the insurer receives from policyholders.
“We ingest millions and millions of miles of data every day in real time” and receive other information through submissions to HDVI in documents, Mr. Wallace said. “When you can marry those together, then you have a really, really powerful data set” that can be fed into an underwriting dashboard.
Investors look forward to new era for insurtech sector
Artificial intelligence will help to reinvigorate an insurtech investment sector that is off its valuation highs of 2021, according to a panel of experts who spoke last month at the annual InsurtechConnect conference.
“AI is insurtech’s new producer, and things are changing,” said David Katz, Toronto-based partner at Radical Ventures Investments Inc., a venture capital fund with teams in the United States, Canada and the United Kingdom. He likened the investment sentiment to a rock band that has found new success with a fresh producer.
Mr. Katz added that technology uptake is on the rise among brokers, insurers and others. “On the risk side, they’re adopting these solutions faster than they have in the past. … The adoption has been pretty, pretty strong and pretty quick,” he said.
Amir Kabir, an adviser for AV8 Ventures, where he previously served as a general partner, acknowledged the challenges faced by the insurtech investment sector but emphasized the staying power of the insurance sector.
“The environment is tough right now (for insurtech investment), but what’s not going to change, from my perspective, is that financial services and insurance are a core part of the economy.”
Luis Viñas, Barcelona, Spain-based partner with venture capital firm Alma Mundi Ventures, said that in some cases a focus on scale rather than profitability ultimately dented returns on investments in the insurtech sector and had a role in souring sentiment.
Ruth Foxe Blader, founder and managing partner at Foxe Capital, an early-stage venture capital fund, was upbeat, however, noting that early stage funding continues to be robust.
“The market is amazing,” Ms. Foxe Blader said, noting that seed rounds are averaging almost $14.9 million, which is higher than it’s ever been. “So, seed funding is not suffering at all.”