AI insurance tech attracts execs, not underwriters, in the market.

May 2, 2024
1 min read

TLDR:

Executives in the insurance industry are more enthusiastic about AI and machine learning technology than underwriters. While execs see the potential benefits in using this technology to improve underwriting quality and reduce fraud, underwriters have concerns about overcomplexity and data integrity. Engaging underwriters in early discussions and showing them that the models are transparent and explainable could encourage adoption of AI technology. The industry must adapt to volatility by modernizing core systems and deploying advanced technologies for better outcomes and transparency.

The industry is exploring the use of artificial intelligence and machine learning in insurance operations. While executives are excited about the potential benefits of this technology, underwriters are more cautious. A recent report by Capgemini Research Institute found that only 43% of underwriters see AI automation as a tool to elevate the quality of underwriting and reduce fraud, compared to 62% of executives.

Underwriters expressed concerns about the complexity and data integrity of AI technology, leading to hesitancy in its implementation. The report suggests that involving underwriters in early discussions about the technology’s transparency and explainability could encourage adoption.

Capgemini global insurance industry leader Adam Denninger emphasized the importance of embracing AI-driven insights and automation to drive a competitive path towards underwriting profitability in the face of evolving risk dynamics and policyholder behaviors.

The report highlighted the gap between executives’ desire for more productive workflow models using AI technology and underwriters’ perceptions of the current data environment. While 83% of executives believed predictive models were crucial for underwriting, only 27% said their companies had the necessary capabilities for implementation.

Among underwriters, there was interest in using drone footage data and connected devices for real-time data use, but the lack of necessary technology within carriers hindered their implementation. The industry is encouraged to modernize core systems and deploy advanced technologies to adapt to the changing landscape of insurance operations.

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