Generative AI In Insurance: Insurers, Customers Differ On Expectations

There is a disconnect between how insurers and their customers prioritise the use of generative artificial intelligence. While industry executives focus on experience and agree that rapid adoption of gen AI is necessary to compete, customers are seeking personalised risk products and insights, and express reservations about gen AI, according to new research by IBM's Institute for Business Value.

Insurance chief executive officers surveyed were almost evenly divided on whether they see gen AI as more of a risk (49%) versus an opportunity (51%). At the same time, 77% of industry leaders acknowledged that gen AI is necessary to keep pace with competitors.

As insurance organisations walk a tightrope between rapidly building new gen AI capabilities and managing gen AI risk and compliance, they are pushing forward with adoption. Investments in gen AI are expected to surge by over 300% from 2023 to 2025 as organisations move from pilots in one or two areas to implementations in multiple functions across business lines.

Early adopters using gen AI significantly in their customer-facing systems are seeing an improvement in customer satisfaction over insurers not using it at all, including a 14% higher retention rate and a 48% higher Net Promoter Score.