Generative AI — where the money is

Insurers must embrace Artificial Intelligence technology to successfully navigate today’s emerging transformative trends that are shaping the insurance landscape. An aging population, reliance on AI, and new technological, environmental, financial and social risks, are top of mind issues for many claims leaders.

Generative AI is creating new risks & loss

Bearing in mind that there is an important difference in the risks — and risk management approaches — associated with model creation versus model usage and different approaches, some examples in this emerging risk field include:

• Data Privacy and Confidential Information
• Unreliable Model Training
• Unintended AI Actions
• IP/Confidential Information/Trade SecretsTo begin with, we should acknowledge that one AI product in particular has captured the imagination of the public — and the wallets of investors — in recent months.

This is generative AI, a growing subfield of artificial intelligence that uses computer algorithms to generate outputs that resemble human-created content, such as text, images, graphics, music and computer code.

Investors are increasingly drawn to the artificial intelligence sector. Goldman Sachs reports that investments in AI companies and tools have reached approximately $200 billion. In particular, 2023 marked a significant year for generative AI, attracting $21.8 billion in less than a year.

A framework for selecting AI tools

Notable companies such as OpenAI, Inflection AI, Anthropic, Databricks, and recently Aleph Alpha, have secured substantial funding.

A majority of these investments (67%) were directed towards early-stage funding rounds, indicating that the industry is still in its nascent stages.

Aleph Alpha, a developer of LLMs, secured the largest corporate venture capital-backed deal of 2024, raising $500 million in a Series B round.

In the reinsurance industry, the most effective application of generative LLMs has been in processing unstructured data. These models are adept at extracting and consolidating information from diverse external sources into standardized categories, enabling more efficient data analysis.

The customer-centric tech distribution model

According to data from Slipcase, one of the insurance industry’s leading information distribution & analytics platform, in 2022 8% of clicks on content tagged as Technology were on items with AI mentioned in the headline.

In 2023, this value shot up to 46%. Almost half all technology clicks in 2023 were AI-related. Slipcase also noted a rise in InsurTech, which went from 2% to 18%.

Whether it be an agent (representing one or multiple insurers) or a broker (representing a policyholder or a collective of policyholders), these traditional intermediaries serve as a critical link between risk and capital — helping to ensure the correct coverage is provided, at the right price, for the right requirement(s).

Brokers and agents not only offer advice to discuss appropriate coverage, but they are also expert at negotiations.

Consequently, the relationship itself is a very human one (it is extremely difficult to negotiate with technology), and the most appropriate technology in this space supports brokers and agents as humans. Price discovery, instantaneous price comparisons, digital procurements, remote binding and issuing of contracts are all areas where we have seen technology play a huge part in evolving the role of human intermediaries.

…………..

FULL Report — https://beinsure.com/global-insurtech-report-role-ai/