Insurers Can Leverage ChatGPT and AI in the Underwriting
It seems like everyone today is talking about ChatGPT and how it’s going to revolutionize almost every business sector. The life insurance industry is certainly no exception, and we can expect big changes in the coming years to how customer service, underwriting, claims processing, and risk assessments are conducted.
Some argue that the best approach is to focus on automating the more mundane underwriting tasks such as data analysis and risk pattern identification. These are tasks that ChatGPT can be very helpful with thanks to its ability to process large volumes of text data.
However, I want to examine another area in which ChatGPT can be used: the field underwriting process.
Field underwriting
Field underwriting is something of a lost art. At one time, almost every carrier practiced it via field agents who would go door-to-door and talk people through the importance of acquiring life insurance.
These agents weren’t just selling policies, they were also gathering intel on a prospect’s finances, household situation, and general health. With this data, easily obtained through observation and a few tactful questions, an agent could determine an appropriate coverage class for an applicant and make a preliminary decision on insurability.
However, beginning in the mid-1990s, underwriting costs began to spike, resulting in declining profit margins and a corresponding decline in the number of field agents. Today, field underwriting is still practiced, but only when an agent can be confident of collecting a high commission from a wealthy prospect. The vast majority of ordinary middle-income individuals are not being assessed as the profit margins are just too low.
Most insurance agents recognize the value of field underwriting and regret its decline. They just don’t know how to bring it back in a world where everything is done online and door-to-door salespeople are all but obsolete. Enter ChatGPT.
Digital field underwriting through ChatGPT
In the life insurance industry, the most critical customer data remains the same: financial, household, and medical data. Yet with the demise of traditional field underwriting, most underwriters are now sourcing this data after a customer has already made a policy application.
There’s no reason you can’t gather most of the required underwriting data before the customer makes an official application. AI-powered chatbots hold conversations with prospects in much the same way that a human field underwriter would do in the old days (see How AI Technology Can Help Insurers Enhance the Customer Experience?).
These chatbots can respond in real-time to customer queries, ask questions, and advise customers on the insurance policies that are most suited to them. It’s field underwriting for the digital age.
Now, does this mean that a carrier could potentially automate its entire underwriting process? No, human underwriters will still be needed for assessing some applications that exceed certain risk factors. But turning over the data collection to an AI program like ChatGPT can ensure that underwriters have all the information they need once an application lands on their desk.
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AUTHOR: Bob Gaydos — Founder and CEO of Pendella
FULL Report — https://beinsure.com/how-insurers-leverages-chatgpt-ai-underwriting/
More review & outlook — https://beinsure.com
