Convective storms across Southern US states, an "evolving situation"  August 1st 2023

Generative AI - Mitigating Risk To Realize Success in Life Insurance | Celent

Abstract

When we think about things that exist today that could be brought together and generate new products and services, we start to see how AI could really alter the future. As an example, in the not-too-distant future, films could be made exclusively without human actors and look not animated, but as real as movies do today, hence the actors strike. Artificial intelligence is revolutionizing the way we live and work, and it will profoundly reshape our world by transforming jobs and fostering new industries. From this point forward, it will have a transformative, disruptive impact on insurance operations and technology.

The launch of Open AI’s ChatGPT opened the world’s eyes to the extensive possibilities of generative AI. Many insurers have already implemented some form of AI in their organizations. Those who did may have introduced AI policy and governance guidelines as well. However, the introduction of generative AI and other LLMs adds several new elements of risk to the AI mix that insurers need to assess policy for if they haven’t already.

Keith Raymond, Principal Analyst, Insurance, Celent

Unmasking the Future of AI in Insurance: In2Risk Explores Where Quantum Computing and Mind Reading Come In

Whenever there is a significant advance in artificial intelligence technology, it tends to make us consider new possibilities and opportunities.

But along with the growth and potential benefits AI brings to the insurance industry, the potential downside of the rapid development must be considered.

New technologies introduce new risks to be mitigated and managed. And while the insurance industry is poised to address these emerging risks and exposures, the fast pace of development often creates unexpected challenges.

There is no doubt that advances in AI, quantum computing, and mind reading will impact the risk and insurance industry, but the lasting effects of these new technologies remain unknown.

“We have become more aware of cyberattacks and, in cyber insurance, see their sometimes-devastating costs,” commented Monique Ferraro, cyber counsel at HSB.

“The future presents unparalleled challenges.”

Ferraro will share her thoughts this fall at In2Risk in Washington, D.C., along with an all-female panel of attorneys to share their diverse perspectives of these advanced technologies, using their own experiences of currently handling cybersecurity and privacy cases.

Risks and Rewards of Generative AI, Quantum Computing, and Mind Reading

We no longer ask the question of whether AI, automation and other technological advancements will impact the insurance industry. Now it’s a matter of scale and impact of the technologies — and how to mitigate the new risks associated with them.

The global economy is growing thanks to AI, with a recent report showing a projected 7%, or almost $7 trillion, increase in the global GDP in the next ten years based on new applications of generative AI tools in business. The same report also predicted a 1.5% lift in productivity growth over the ten-year period.

But as ChatGPT and other generative AI programs gain market share and media attention at a breakneck pace, questions arise around privacy, cybersecurity, bias, deceptive practices, consumer protection and other issues.

And right alongside the rise of ChaptGPT has sprung its counterpart, WormGPT, a dark web tool purporting to have no ethical boundaries.

WormGPT can be used by hackers to quickly and effortlessly draft social engineering emails that would challenge even the tech-savviest humans, as one example of its possible uses.

“It’s possible that we could see technology that translates our thoughts into readable text or allows our memories to be accessed by computers,” Ferraro said.

Many Americans believe AI will provide their in-home care as they age

Less than a year since the launch of the popular Artificial Intelligence (AI) chatbot ChatGPT, Americans are embracing AI-based care as they age. One third of Americans and over half (58%) of millennials believe AI and robotics will provide their future in-home long-term care.

According to the annual Nationwide Retirement Institute Long-Term Care survey, conducted in partnership with LIMRA in May 2023, this survey of 1,439 U.S. adults aged 24 or over found that younger generations were particularly apt to embrace the technology.

Among the key findings:

• Daily functions: More than one in three (35%) Americans would accept help from a robot for activities such as toileting, dressing and transferring. This rises to 52% among millennials and declines with older generations (23% for boomers and 36% for Gen Xers).

• Companionship: Nearly the same amount (32%) say they would talk to robots/AI if they are feeling lonely. This increases to about half (52%) of millennials.

• Physical safety: Almost seven out of ten (68%) Americans would use AI to alert family/friends if they were to experience a fall or physical danger (63% boomers, 70% Gen X, 72% millennials).

• Medical history: Nearly half (48%) of Americans say they would share their medical history with AI to help support their care needs. This figure increases to 65% for millennials.

Swiss Re streamlines insurers’ natural disaster response with AI

Natural disasters have been increasing in frequency, severity, and diversity in recent years, pressuring insurers to be more efficient and to anticipate event and claim fallout. The same goes for reinsurance firms, which provide insurance for insurers, reducing their likelihood of large payouts—a significant factor in the insurance industry’s response to natural disasters.

According to the US National Oceanic and Atmospheric Administration (NOAA), the US has experienced 360 weather and climate disasters since 1980 in which overall costs reached or exceeded $1 billion for each one, totaling more than $2.57 trillion. In 2023, through July 11, NOAA confirmed 12 such events, including floods and severe storms. To keep up with the unsettling pace, Swiss Re, one of the world’s largest reinsurers, now leverages predictive analytics, machine learning (ML), and artificial intelligence (AI) to help its clients anticipate disasters and mitigate costs.

“If you look at the severity of losses over the past 10 years, one of the trends is that losses in the last five years are almost twice as much as those in the first five,” says Anil Vasagiri, SVP and head of property solutions at Swiss Re. “That’s an unmistakable trend and one which insurers, and reinsurers like Swiss Re, are having to understand and prepare for in order to operate in this sort of environment.”

Along with the overall cost of claims stemming from natural catastrophes (NatCats), insurers face operational challenges from the sudden and voluminous influx of claims that result. Immediately after such disasters, affected areas are frequently difficult or impossible to access, delaying response time to claims.

In his role, Vasagiri is responsible for the data and software assets deployed to Swiss Re’s clients, as well as the company’s overall data strategy. Late last year, Vasagiri’s property solutions division released a significant new tool to help its clients. Dubbed Rapid Damage Assessment (RDA), the platform blends advances in computer vision with other modeling techniques to help insurance clients better understand, plan, and analyze their portfolios before disasters strike, monitor their portfolios as events unfold, and then leverage technology to find and mitigate claims in the wake of an event. This can help identify claims of which policyholders are unaware, says Vasagiri, perhaps because they have holiday homes that have been affected and they live elsewhere, or they were forced to evacuate and have been unable to return. So RDA helps its clients inform those policyholders about how they could file claims