AI: 4 trends for insurers in 2024
February 7, 2024
By Stan Smith
Artificial intelligence continues to advance in both efficiency and accuracy, with its integration accelerating across various industries. In recent years, the insurance industry has accelerated its use of AI, recognizing its potential to enhance effectiveness and streamline operations. AI provides insurers with accurate and consistent insights, facilitating quicker and more informed decision-making, while also reducing risks. As AI adoption continues to surge, 2024 is poised to see significant strategic shifts in how insurance companies leverage this technology.
To better understand the artificial intelligence landscape for insurance companies in 2024, Gradient AI conducted a survey among more than 100 customers across diverse insurance companies, revealing four AI trends:
1. Increased investments in AI
A staggering 90% of insurers surveyed plan to increase their AI investments, underscoring AI’s role in enhancing operational effectiveness and efficiency. The primary AI focus areas, according to 75% of respondents, are underwriting and claims management, policy pricing optimizations, expedited quote turnaround times, triaging claims, and minimizing both the duration and cost of claims.
An emerging trend in 2024 is the widespread adoption of generative artificial intelligence, which can generate new content or data by using patterns and information acquired from past examples. This is empowering insurers to automate repetitive tasks, including generating medical notes and routine correspondence, as well as processing simple and straightforward applications and claims.
2. Prioritization of cloud and big data
About 40% of insurers identified cloud and big data as their primary focus, aiming to drive innovation and improve operational efficiency. This focus underscores the role of ensuring data quality, given its direct impact on AI model reliability. The management of large volumes of data in cloud environments can be susceptible to errors, necessitating vigilant monitoring and management practices to ensure accuracy and reliability.
3. Enhanced competitive policy pricing
Almost 50% of respondents pointed to the importance of using AI for policy pricing. AI’s adeptness at analyzing big datasets for risk assessments is fundamentally reshaping traditional practices in the industry. Policy pricing is essential in improving accuracy and customer satisfaction for insurance companies. By leveraging AI, insurers are achieving more precise policy pricing by considering multiple key risk factors. These capabilities not only elevate accuracy but also ensure competitiveness, paving the way for the establishment of customer-centric pricing structures.
4. Closing the talent gap
AI’s ability to preserve institutional knowledge is expected to play a key role in bridging the talent gap amid ongoing workforce transitions in the insurance industry. In 2024, this recognition is expected to be catalyst for insurers to embrace AI, with 62% of respondents recognizing AI’s abilities in talent management. As a result, expect to see AI adoption to be included in future strategies for retaining talent.
The industry's commitment to adopting artificial intelligence, along with considerations for data quality and talent retention, will bring increased innovation and efficiency to the insurance landscape in 2024. In the coming year, expect to witness a shift in the role of artificial intelligence as it evolves from solely a technological enabler to a transformative force that reshapes the insurance landscape.
Stan Smith is CEO of Gradient AI. Contact him at [email protected].