Can GenAI change the perception of insurance?

It’s no surprise that clients typically only think about insurance when they need to make a claim.

Unlike tangible products, insurance is not an asset that can be seen or touched, which can make it difficult for clients to appreciate its value, especially when they pay premiums and nothing goes wrong.

To compound this issue, it’s often negative headlines about insurance that go viral. While many insurers in the Canadian market do an excellent job, sensationalized stories stick in consumers’ minds and echo across the internet.

A quick search for ‘insurance memes’ on Google reveals negative jokes about the industry, with consumer grievances ranging from difficulty reaching representatives to long waits for claim payouts.

What do consumers really think about insurance?

According to findings from a recent PC Insurance report, nearly half of all Canadians surveyed believe the insurance industry is outdated. When it comes to purchasing home and auto insurance, 21% cited ‘lack of trust’ as a top concern.

Further findings from the survey revealed that many Canadians are also deterred by the amount of time it takes to purchase policies, underscoring the industry’s lack of modernization, with 34% of respondents believing the insurance buying process is too time-consuming.

Interestingly, the survey also showed that consumers are turning to brokers the least for advice on insurance, preferring to do their own research first, followed by consulting family and friends, with just 19% of respondents turning to brokers.

Emphasizing this issue, Chris Van Kooten (pictured above), president and CEO, Allianz Global Assistance Canada, shared: “Insurers should be trusted, but we tend not to be. Finding ways to connect better with people through services and having insurance be more service-oriented, rather than just a payment-based business can help us do that.”

A move towards qualitative data

Ironically, generative AI (GenAI) may be the solution to building better human connections.

By outsourcing data processing, brokers and insurers can leverage AI to deliver value-added services to clients such as:

• Claims processing: AI can streamline the claims process by quickly verifying information, assessing damages, and predicting claim costs. Faster and more accurate claims processing can reduce client frustration and enhance satisfaction.
• Personalized recommendations: AI can analyze a client’s data, such as their financial status, lifestyle, and risk profile, to provide tailored insurance recommendations. This personalized approach helps clients feel understood and valued, increasing trust in broker recommendations. Reflecting on the importance of tailored service, Kooten noted, “I think the problem that the insurance industry has had for a long time is that it has always focused on collecting as much data as possible to segment risks, without necessarily focusing on consumer behaviour and how people are living their lives. Artificial intelligence is going to change everything. Instead of solely collecting structured, quantitative data, with AI we can bring in more types of qualitative information and connect the dots between the two to make better decisions.”

• Risk assessment and management: AI can also help brokers assess risks more accurately by analyzing large datasets to identify potential issues that might not be obvious through traditional methods. This allows brokers to provide better advice on risk management and appropriate coverage.
• Fraud detection: AI can detect unusual patterns and flag potential fraud, helping to protect clients and insurers from fraudulent claims. By reducing fraud, brokers and insurers can build consumer trust and keep premiums lower.

Are consumers ready for GenAI?

Recent data points to yes.

According to Insurity’s 2024 AI in Insurance report, AI’s application in property and casualty insurance had the strongest consumer support, with fraud detection emerging as the top service, earning 35% of consumer votes. This was followed by 32% of respondents supporting AI’s use to deliver personalized products and promotions, and 24% supporting AI in customer service.

While GenAI can help foster client satisfaction and trust by delivering fast, accurate and personalized services, Kooten warns brokers and insurers against falling into the trap of over-automation.

“We still have to find ways to have that connective tissue with clients, to still value human interactions so that we don’t end up in a situation where everything’s robotic and automated and feels impersonal,” he said.