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Highlights
- Generative AI is reshaping the insurance landscape, but priorities differ between industry leaders and clients.
- Insurance executives see generative AI as both a risk and an opportunity, emphasizing experience over personalization.
- Investment in generative AI is set to surge, with a focus on building trust and enhancing customer connections.
New research from IBM's Institute for Business Value highlights a significant disconnect between the priorities of insurance executives and those of their customers regarding the use of generative AI. The study, which surveyed 1,000 insurance c-suite executives across 23 countries and 4,700 insurance customers in nine countries, reveals that while industry leaders prioritize improving customer experience, clients are more interested in personalized risk products and insights. The findings are detailed in the report titled "Generative AI in the Insurance Industry: You Can't Win if You Don't Play."
Mark McLaughlin, Director of Global Insurance with IBM Technology, notes that while the insurance sector has made strides in generative AI, especially in customer experience through chatbots, there is an urgent need for comprehensive governance frameworks. "Insurers must ensure transparency, privacy, and explainability to build trusted AI assistants and reliable processes," he stated. He emphasizes the importance of leveraging AI to connect customers with the right products, highlighting that AI can significantly improve customer risk experiences and enhance the IT tools that facilitate those experiences.
The research presents several crucial insights into the industry's stance on generative AI:
- Insurance CEOs are nearly evenly split on the perception of generative AI, with 49% viewing it as a risk and 51% as an opportunity.
- A significant 77% of industry leaders recognize that generative AI is essential for keeping pace with competitors.
- Investment in generative AI is expected to skyrocket by over 300% from 2023 to 2025, as organizations transition from limited pilots to widespread implementations across various business functions.
However, the report also highlights customer concerns regarding generative AI. Only 29% of surveyed insurance customers expressed comfort with generative AI virtual agents providing service, and just 26% trust the reliability and accuracy of the advice given by these AI systems.
To bridge the gap between insurer and customer expectations, the report offers several key recommendations:
- Develop more tailored insurance products that incorporate flexibility, advice, and a linkage to risk data.
- Match products intelligently to individual customer needs, enhancing the personalization aspect of offerings.
- Address trust issues by implementing ethical and governed AI practices.
- Utilize AI to integrate underlying risk data, addressing long-standing technical debts within the insurance and financial service sectors.
- Deploy and govern AI across the enterprise, leveraging local knowledge experts to connect AI solutions to the insurance value chain.
IBM continues to be a leading provider of enterprise AI, hybrid cloud architecture, security, and ESG insights to the global financial services sector. With its extensive portfolio of services and solutions, as well as a robust ecosystem of fintech partners, IBM empowers collaboration and innovation within the industry. As a trusted partner, IBM supports financial institutions throughout their digital transformation journeys via IBM Consulting and offers the necessary infrastructure, software, and services through IBM Technology.
