62% Insurance Leaders Optimistic About AI, ML Impact on Underwriting, Fraud: Report
A study on Wednesday found that 62 per cent of Insurance leaders are optimistic about artificial intelligence (AI) and machine learning (ML), they believe these technologies are improving underwriting accuracy and decreasing fraud.
Despite this optimism, the study by Capgemini highlighted that only 43 per cent of underwriters trust and regularly accept automated recommendations from decision-support predictive analytics tools. It stressed this hesitation stems from perceived overcomplexity (67 per cent) and concerns over data integrity (59 per cent).
The report suggested that insurers can overcome their reluctance by engaging underwriters early on to secure buy-in and by retaining all respective coordinators in the loop to ensure the AI and ML models are appropriately transparent. This will help to continually assess the progress, it added.
Meanwhile, the report also disclosed that a majority (83 per cent) of P&C insurance executives believe predictive models are critical for underwriting’s future and said only 27 per cent confirmed their firm has advanced capabilities.
Citing the global observation the study revealed that about 53 per cent of policyholders expressed their concern about the amount of personal information collected by insurers. However, almost two-thirds showcased their will to share more data in exchange for transparency, discounts and reassurance, asserting to follow the practice if their information is secure. This sentiment represents a chance to scale up risk mitigation propositions and enhance insurability while building engagement and trust, leading to higher customer retention.
P&C insurers face a considerable challenge in meeting the data needs of their underwriters as there are significant gaps between the importance of various data types and insurers’ data capability maturity. According to the report, 49 per cent of underwriters value drone image data yet very few insurers are equipped to support and analyse them effectively.
Similarly, one-in-two underwriters want data from connected devices for real-time information about personal and commercial assets, although only 12 per cent of insurers can capture such data effectively.
Additionally, the report underscored the resulting lack of data mastery, which is hurting an insurer’s core business as incomplete risk evaluation plagues 77 per cent of insurers. With weak data resources, 73 per cent of firms are facing limited pricing accuracy which prevents adequate claims coverage and eventually may threaten solvency. Another 70 per cent of organisations' found inconsistent underwriting decisions as a prevailing issue.
This research was based on insights from 18 markets, Australia, Belgium, Brazil, Canada, France, Germany, Hong Kong, India, Italy, Japan, Luxembourg, the Netherlands, Norway, Portugal, Spain, Sweden, the United Kingdom and the United States.
