The insurance industry is stressed by factors driving global volatility and disruption, like climate change, cybersecurity threats, war and a growing talent crisis. Seven in 10 insurance organizations worldwide say they feel pessimistic about market prospects or unprepared for disruptions on the horizon, a 2023 IDC survey found. A staggering 86% of the C-suite feel the same.
But I don’t share their downcast mood.
At the risk of sounding Pollyannaish, I see the industry’s future as bright—if only insurers move quickly to seize AI’s wide-ranging value. By spurring automation and next-gen data analytics capabilities, AI can drive productivity gains and product innovations and improve the employee experience.
Once all this enterprise value comes into focus—and for many insurers, it already has—the industry’s pessimism will dissipate. Frayed nerves will calm as new tools and technologies integrating AI boost agility and evolve workforces. Leaders’ confidence in their industry’s rock-solid value and growth prospects will grow because of–not despite–an increasingly risk-laden world.
Here are three of the biggest ways AI-driven change will help build the insurance industry’s future.
See also: 5 Ways Generative AI Will Transform Claims
Powerful Risk Management Predictions
AI can bolster insurers’ core competency: managing and pricing risk. Consider climate change—as historic weather patterns change and extreme events become more frequent, AI models can help predict emerging trends. These models live and breathe data. Give them reams of climate data detailing geography, temperature and other weather variables—not to mention piles of claims data drawn from millions of policies— and AI tools can offer location-specific predictive analyses.
Simply put, AI enables superior risk management, and that can help organizations get ahead of big changes reshaping property and casualty insurance underwriting, for example. While still not a crystal ball, AI can provide firms with a better understanding of the most powerful force shaping the planet’s future: climate change.
AI can also level up the power of HR platforms to help leaders improve workforce predictions. Organizations can train customized large language models on datasets detailing employee skill self-assessments, the skills required for specific roles, teams and functions and turnover and vacancies. HR leaders can then track workforce skill trends, flags deficits, prioritizes needs and predicts skills gaps. Assisted by AI, leaders can stop guessing about their future hiring needs.
Recommendations From Policies to Organizational Management
AI’s capabilities will help insurers do more than just predict and track risks. As AI models become more sophisticated, they can provide suggestions built from predictions and analyses to support insurers and customers. For example, AI can offer product and policy recommendations geared to climate-change scenarios for specific geographic regions, like surfacing a three-month flood insurance policy proposal ahead of hurricane season.
Within organizations, AI can help leaders determine recruiting priorities and develop upskilling strategies mapped to strategic goals. AI can even recommend knowledge-capture ideas based on recent turnover and retirement-based attrition trends.
Of course, AI suggestions must be reviewed, validated and possibly tweaked. Humans must remain in the driver’s seat. The point is that, with guardrails in place, AI can help insurers actively manage customer, market and workforce risks instead of simply reacting to circumstances.
Or think of it this way: AI will help fuel an organization’s innovation engine, allowing insurers to strengthen their role as value creators and customer advisers.
See also: 5 AI Trends You Can't Ignore in 2024
Improved Employee Experience
Cultivating a culture of innovation is a workforce imperative, as well. With many insurance veterans on the cusp of retirement—by 2030, the industry is expected to face the largest shortage of workers of any industry—insurers need to reel in new talent ASAP.
But here’s the deal—younger generations don’t want to work with cumbersome, outdated technology. Fortunately, insurers get it: IDC reports that technology is the top priority for insurance organizations worldwide, with profitability and customer satisfaction closely following.
To attract next-gen talent, the industry must improve the employee experience. AI can play a valuable role here in two ways. First, streamlining IT processes via automation can free employees to spend more time on strategic–and satisfying–work. Second, AI can directly support and improve the employee experience via faster analytics capabilities that shorten time to insights and accelerate decision-making.
That dual value proposition is what's driving IT investments in the insurance industry: Nearly eight in 10 insurance leaders surveyed by IDC say they want more streamlined IT processes to simplify uncovering business insights for nimbler decision making, and 34% of IT initiatives are intended to create a more intuitive user experience across functional areas to make employees happier and agile.
AI will play a key role on both sides, helping to power innovation and workforce retention and recruiting. That’s reason enough to be optimistic about the industry’s future.
