Close Menu
    What's Hot

    Editor’s Letter – Volume 4, Issue 5, May 2025

    14 May 2025

    New Data Shows the Extent to Which American Seniors Are Missing Out by Lapsing or Surrendering their Life Insurance Policy

    14 May 2025

    Buy-Ins To Buy-Outs Appear Stalled As Deal Complexity, Administration Resources Pose Obstacles

    14 May 2025
    Facebook X (Twitter) Instagram
    Instagram LinkedIn X (Twitter)
    Life Risk News
    • Home
    • Features

      New Data Shows the Extent to Which American Seniors Are Missing Out by Lapsing or Surrendering their Life Insurance Policy

      14 May 2025

      Buy-Ins To Buy-Outs Appear Stalled As Deal Complexity, Administration Resources Pose Obstacles

      14 May 2025

      Is Servicing an Overlooked Source of Life Settlement Alpha?

      14 May 2025

      Q&A: Shelly Beard, Managing Director, WTW

      14 May 2025

      Longevity Tech to Emerge as Distinct Sub-Sector of Venture Capital Market?

      14 May 2025
    • Commentary

      UK Life Insurers to Benefit from Robust Bulk Annuity Market in 2025

      14 May 2025

      The Power of Uncorrelated Diversification During Market Volatility

      14 May 2025

      Overseeing BPA Growth Safely

      14 May 2025

      Could Climate Change Cause the Buy-In Market To Collapse?

      10 April 2025

      ICS vs Solvency II: Comparing Risk Corrections for Illiquid Liabilities

      10 April 2025
    • Events
    • Magazine
    • News

      Life Insurance Settlement Association Publishes Latest Market Data Collection Survey Results

      13 May 2025

      UK Aggregate Defined Benefit Pension Fund Surplus Down Again in April

      12 May 2025

      Monument Re Transfers Greycastle Portfolio to RGA

      12 May 2025

      Cancer Research UK Pension Scheme Completes Bulk Purchase Annuity Buy-In With Standard Life

      12 May 2025

      AQA Education Completes Bulk Purchase Annuity Buy-In With Rothesay

      12 May 2025
    Subscribe
    Life Risk News
    Home » Generative AI Set to Transform Life Insurance Industry

    Generative AI Set to Transform Life Insurance Industry

    Features 14 September 2023Greg WintertonBy Greg Winterton
    Twitter LinkedIn Email
    Share
    Twitter LinkedIn Email

    Life insurance companies have a reputation for being something akin to an oil tanker – big, and slow. But their approach to incorporating generative AI (GenAI) into various functions of their businesses can hardly be claimed to be thus.

    A snap poll conducted by technology research and consulting firm, Celent, in June this year revealed that nearly 10% of life insurers in the United States were already using GenAI in production. And 50% said that they would be either using GenAI in a live environment or in a test environment before the year is out.

    The technology is being used mainly in customer experience, sales and marketing functions, for a few reasons. Chatbots, for example, are arguably already embedded in these front office functions in many industries, not only insurance, so it’s not unusual for consumers to interact with GenAI through this medium.

    But the tech is being used less so in middle and back-office functions, such as underwriting. According to Keith Raymond, Principal Analyst, Insurance at Celent, that’s because of the uncertainty around legal risk.

    “Underwriting is a risk area for insurance companies when using AI,” he said. “Large language models are trained with data that can be biased. Biases in underwriting rules are a key point for mitigation, all humans are biased, consciously or not.”

    The pace of change in the AI space has always been significant, but the release of GenAI provider ChatGPT in late November 2022 arguably thrust the technology into the public consciousness almost overnight.

    Government responses vary widely across the globe although most are looking for interoperability they have differing opinions on how to balance risk verse innovation. In the United States, the Biden-Harris administration convened leaders of seven major AI providers in July to secure voluntary commitments from them around safety and transparency, and Vice President Harris convened civil rights leaders earlier in July to discuss risks posed by the technology in terms of discrimination.

    These meetings were not insurance specific. But life insurers in the United States do have a yardstick by which to measure compliance when it comes to their use of AI. Back in 2020, the National Association of Insurance Commissioners (NAIC) published a document setting out principles which insurance companies should consider as they look to incorporate the technology into their businesses. But more recently, in July 2023, the NAIC published a Model Bulletin which specifically focuses on the use of large language models.

    “The NAIC model bulletin is a big leap forward in terms of structure and guidelines for life insurers and their use of AI,” said Raymond.

    These guidelines have been helpful, but best practice isn’t the law. And if Celent’s snap poll results turn out to be true – that half of all life insurers will have GenAI either working in a live environment at year end – then the customer experience, sales and marketing functions will still be the areas that see most of the investment, not just because of the efficiency gains this technology provides, but because of the lower regulatory risk.

    And the middle and back office is arguably where the most gains are to be made from incorporating GenAI into a life insurer’s technology stack. While the front-end use might help a life insurer to shift a few more policies or save money on headcount due to the ability of the GenAI system to do a good enough job to replace a sales representative, the significant benefit lies with the underwriting function, and the ability for GenAI to mitigate mortality risk.

    “Mortality risk is obviously a significant risk that life insurers are exposed to,” said Raymond. “Using GenAI in the underwriting process means that insurers will be able to manage mortality risk more effectively because they’ll be able to price policies more accurately. It’s an area of significant impact for an insurer.”

    The full potential of GenAI is unknown, but what is known is that this is more a freight train than an oil tanker, hurtling onwards at high speed.

    “The previous decade in the insurance technology space was all about the cloud – basically, migrating systems for efficiency reasons,” said Raymond. “But the next decade will be all about AI. For life insurance companies and regulators, this is a seismic change and it’s not slowing down. It could, in some ways, end up being the ‘forever decade’ for life insurers because of the enormity of the opportunity and the impact of it on not only the life insurance industry, but other industries that depend on it.”

    2023 - September Equity Release / Reverse Mortgages Life Insurance Insurtech Volume 2 Issue 9 - September 2023
    Share. Twitter LinkedIn Email

    Related Posts

    New Data Shows the Extent to Which American Seniors Are Missing Out by Lapsing or Surrendering their Life Insurance Policy

    14 May 2025

    Buy-Ins To Buy-Outs Appear Stalled As Deal Complexity, Administration Resources Pose Obstacles

    14 May 2025

    Is Servicing an Overlooked Source of Life Settlement Alpha?

    14 May 2025

    Q&A: Shelly Beard, Managing Director, WTW

    14 May 2025

    Comments are closed.

    Most Popular

    New Data Shows the Extent to Which American Seniors Are Missing Out by Lapsing or Surrendering their Life Insurance Policy

    14 May 2025

    Buy-Ins To Buy-Outs Appear Stalled As Deal Complexity, Administration Resources Pose Obstacles

    14 May 2025

    Is Servicing an Overlooked Source of Life Settlement Alpha?

    14 May 2025

    UK Life Insurers to Benefit from Robust Bulk Annuity Market in 2025

    14 May 2025
    Ad

    Your trusted source for capital markets participation in Life Risk

    X (Twitter) Instagram LinkedIn
    Life Risk
    • About Life Risk News
    • Get In Touch
    • Our Team
    • Copyright Notice
    • Terms and Conditions
    • Privacy Policy
    • Sitemap
    Coverage
    • Home
    • Features
    • Events
    • Commentary
    Subscribe

    Type above and press Enter to search. Press Esc to cancel.

    We use cookies on our website to give you the most relevant experience by remembering your preferences and repeat visits. By clicking “Accept All”, you consent to the use of ALL the cookies. However, you may visit "Cookie Settings" to provide a controlled consent.
    Cookie SettingsAccept All
    Manage consent

    Privacy Overview

    This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
    Necessary
    Always Enabled
    Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
    CookieDurationDescription
    cookielawinfo-checkbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
    cookielawinfo-checkbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
    cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
    cookielawinfo-checkbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
    cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
    viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
    Functional
    Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
    Performance
    Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
    Analytics
    Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
    Advertisement
    Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
    Others
    Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
    SAVE & ACCEPT