From improving underwriting accuracy and customer experience to streamlining claims processing, artificial intelligence (AI) is reshaping the insurance landscape.
This year in particular has shown a significant rise in adoption of AI technologies among insurers, with 77% reporting they incorporate AI in some capacity based on a survey by Conning, up from 61% from the prior year.
New Standards and Recommendations on the AI Use
In response to the growth in both third-party and proprietary development of AI and emerging technologies for the insurance industry, the National Association of Insurance Commissioners (NAIC) recently published new standards to ensure ethical and fair practices.
The bulletin, while not a regulation, outlines “expectations as to how insurers will govern the development/acquisition and use of certain AI technologies.” In addition, it advises insurers on how to best prepare for potential requests for documentation should an investigation be opened
The use of AI has also been on the rise within social insurance programs such as Social Security Disability Insurance (SSDI), spurred by the backlog of claims made worse throughout the pandemic, and now part of SSA’s established priority to modernize its systems. One example of its most successful use of AI involves a combined machine learning and predictive analytics too called Intelligent Medical Language Analysis Generation tool IMAGEN, which helps to speed up the disability determination process by automating the analysis of medical record content and providing decision making support to adjudicators.
Based on the growing use in the social insurance space, The National Academy of Social Insurance has launched a new task force in Washington to develop principles and standards for safely incorporating its use in administering disability benefits. The task force notes other use cases such as Medicaid and Unemployment Insurance that provide important learnings around potential pitfalls.
AI Trends in the Disability Insurance Market
Understanding the opportunities and implications for emerging tech and AI in social insurance (SSDI) and private disability insurance market is critical given the pace of change and increasing consumer expectations for seamless, user-friendly digital experiences.
Below are the top 3 trending AI tools for insurance and what to consider for the disability insurance industry.
Generative AI (or GenAI)
GenAI is a form of AI built on sophisticated machine learning models that can create original content—such as text, images, video, audio or software code—in response to a user’s prompt or request. The most common example is ChatGPT, which has been rapidly adopted worldwide. Among insurers, GenAI has been assimilated in various ways, but the common objective remains the same – gaining efficiencies.
One trending technology is AI-driven chatbots. Using large language models (LLMs),, chatbots can now comprehend and respond to human-based interactions, understand the nuances of a conversation, and even grasp intent and sentiments.
For insurers, chatbots pose an opportunity to streamline processes and improve customer service and claims processing times. From assisting with first notice of loss (FNOL), to updating claim details and providing tracking support, these can improve the overall experience for claimants and improve efficiencies for insurers.
In addition, GenAI can be used as “digital minions” to help claims professionals review lengthy documents, allowing them to spend more time on cases requiring more of their time and expertise. Reducing the time it takes to review vast amounts of data, Digital Minions can help insurers to focus on their core competencies, such as customer relationships, and make more informed risk-based decisions.
Machine Learning and Predictive Analytics
One of the biggest challenges for insurers, especially as AI becomes more sophisticated, is detecting fraud. While not a new entrant to the AI playing field, predictive analytics tools that leverage machine learning have become more sophisticated, as have the tactics of would-be fraudsters.
Tools that can detect anomalies by analyzing claims data and other sources, and predict potential high-risk claims, can be critical to minimizing or eliminating fraud losses which are nearly double what they were 30 years ago.
In addition, AI-powered tools that use Natural Language Understanding (NLU) can access a variety of publicly available, abstract sources of information (ie. social media posts, Yelp reviews, etc.) for assessing potential red flags in these disparate pieces of information.
Considerations for Disability Insurers
- Third-Party versus Homegrown Technology: The inclination to avoid the cost of a third-party system or service is one that insurers grapple with. While it can be expensive, the benefits of being able to implement many in a short amount of time is attractive. If an insurer wants to leverage one of these tools, it can come with not just a financial price but the potential for enhanced security risks.
- Regulatory Concerns: With the rapid evolution of GenAI comes increasing concerns about the implications of its use. While the NAIC has now provided a set of guidelines, state insurance departments are left to do the work of enforcement. With increased focus on potential liability and ethical concerns, there may be future regulations to put in check for appropriate and ethical use of certain AI capabilities.
- Risk Mitigation: With the increased usage of black box technologies comes the concern about exposure to cyberattacks and security breaches. Insurers need to focus on how to minimize these threats and ensure that data privacy and security are a top priority. In addition, the more insurers rely on AI to interact with policyholders and determine decisions, the more important it will be to ensure accuracy in the information that it’s leveraging.
We’re keeping an eye on the evolving landscape of AI and what disability insurers need to understand about the use of emerging technologies. Implementing new systems can be overwhelming, requiring the right strategy, framework and expertise for a successful outcome. If you are interested in hearing more about how our services can support the growth of your organization, contact us today.
