How the future of AI can humanise insurance

AI is transforming the work of every industry – and insurance is no exception. In fact, the sector outstrips others in terms of AI adoption, with use cases ranging from automated claims processing to enhanced fraud detection. But the goal of increased AI use shouldn’t be to write underwriters out. A balance between automation and human wisdom is still essential to provide the highest level of service to customers and take insurance into the future. 

Increasing efficiency and decreasing risk 

One of the big benefits AI offers is efficiency. Insurance firms recognise this value: IBM finds insurers are devoting as much as 40% of their AI budget to efficiency gains and operational effectiveness. Their AI investment is paying off, with insurers reporting a reduction of claims processing time by 18.6% with 15.45% faster product times-to-market. 

In an industry awash with data, there are myriad uses for AI and its vast data-processing powers. Summarising tasks and call summaries are obvious applications but the real excitement comes from the deployment of generative and agentic AI. Gen AI’s reasoning, judgement, creativity, and empathy capabilities are proving pivotal to the future of insurance, assisting in a range of critical tasks including real-time pricing analysis, accurate and personalised policy recommendations, customer communication support, and ‘first notice of loss’ insights. 

An area of special value, however, is in managing risk. Gen AI has the ability to support in customer risk assessment, liability determination, and fraud prediction and detection – critical in a sector where British insurers face over a billion pounds in insurance fraud each year. With AI tools being leveraged by criminals to create fake identities, forge documents, and bypass verifications systems, it’s essential insurers are also making the most of the latest technology. 

Balancing automation and human expertise 

However, the end goal isn’t to replace all underwriters with algorithms. It’s the balance of AI and human knowledge that will elevate the industry and firms must invest in both advanced technologies and human expertise in order to maintain it. The insurance industry has an ageing workforce and well-documented talent-shortage: the UK’s Chartered Insurance Institute estimated last year that a quarter of the sector’s talent is due to retire within the next decade, while only 4% of young people consider a career in insurance appealing. Attracting and investing in young talent – as well as AI – will be essential to the survival of firms and the industry as a whole. 

Human oversight of AI processes is essential in ensuring tools are working in the ways firms want. Yet as much as people have a role to play in humanising AI, AI can help ‘humanise’ and increase connection with a firm’s customers. McKinsey details how one insurer introduced intelligent automation when offering quotes to prospective customers and selling policies – resulting in 80% of transactions moved online and a dramatic uptick in customer satisfaction scores. Leveraging a 24/7 chatbot enabled another insurance carrier to serve its customers after-hours, seeing an 11% increase in the number of prospective customers who progressed to buying policies, and yet another used AI to generate its daily 50,000 claims-related communications, reporting these were clearer and more empathetic than those written by humans. All these examples demonstrate how AI can create a more personalised, connected experience for customers and vastly improve insurers’ level of service. 

Building a human-centric future for insurance  

The future of insurance is one of blended AI and human work, allowing one to enhance the other. This collaboration allows firms to build a truly human-centred strategy that treats customers as individuals, anticipates their needs, and focuses on building trust. Prioritising either of these sides will lead to an imbalance: AI investment is crucial in order to keep up with competitors and the fast-moving insurance landscape, but skilled talent are essential in guiding firms’ work overall. It’s when AI and humans work together, in harmony, that the full potential of the industry will be unlocked.