Insurers are significantly increasing their investments in generative artificial intelligence (AI), with projections indicating a rise of over 300% from 2023 to 2025. This surge reflects a growing commitment to integrating AI across various functions, moving beyond initial pilot programs.
Recent findings from the IBM Institute for Business Value’s report, “Generative AI in the Insurance Industry,” reveal that early adopters of generative AI are experiencing notable improvements in customer satisfaction. These insurers report a 14% higher retention rate and a 48% increase in Net Promoter Scores compared to those not utilizing AI.
While many insurers are focusing on enhancing brand and product experiences, the report underscores that customers prioritize tailored offerings that specifically address their individual risks. Generative AI facilitates this customization, enabling insurers to provide more personalized services. However, challenges persist in meeting customer expectations.
The report highlights a division among insurance CEOs regarding the future of generative AI. Approximately 51% view it as an opportunity, while 49% perceive it as a risk. Executives recognize the potential of AI to enhance sales and customer experiences but also express concerns about cybersecurity threats, operational disruptions, and biases that may arise from AI systems.
Despite these apprehensions, a substantial 77% of industry leaders agree that swiftly adopting generative AI is essential for maintaining a competitive edge. Early adopters utilizing AI across direct, agent, and bank channels have reported improvements in sales performance and customer acquisition costs.
However, a significant disconnect exists between the services insurers offer and the expectations of their customers regarding AI. This gap signals the need for insurers to critically assess and refine their AI strategies.
To effectively bridge this divide, the report identifies three key areas for insurers to focus on: enhancing customer engagement, ensuring technological readiness, and refining operating models. Addressing these factors will align AI strategies with customer expectations, upgrade legacy infrastructures for AI deployment, and optimize business outcomes.
The report also emphasizes the importance of responsible AI adoption, providing a guide for insurers to harness the full potential of AI and translate it into tangible growth.
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