Insights: AI Can Help Insurers Embrace Risk

This article takes a look at how AI continues to offer admin and customer service enhancements for insurance brands. But it’s also about understanding risk, in all its complexity. Insurers should embrace the future.

It’s by Alby Van Wyk, Director and Executive Vice President of Munich Re Automation Solutions.

After decades of being labelled the tech laggard of the finance world, the last few years have seen huge growth in the life insurance sector’s appetite for innovation. Following a pandemic-enforced digital transition, many companies began deploying artificial intelligence (AI) solutions to improve customer journey and operational efficiencies, and to digitise information and business applications. Chatbot systems became particularly popular, with many more life insurance websites featuring a friendly pop-up to manage customer communications at the sales or policy level.

This level of AI is now fairly commonplace in the sector. Unfortunately, many insurers remain hesitant to take the next step thanks to an understandable, albeit misplaced, risk-aversion.

It’s almost inevitable. Spend your working life identifying, analysing, and quantifying risk, and you’re likely to have a fairly strong aversion to it. Or more accurately, an aversion to undertaking new endeavours with inadequately understood consequences.

Taking day-to-day risk management out of the hands of human underwriters and handing it to machines is just such a new endeavour, and, as such, is still seen widely as potentially perilous.

In fact, the opposite is true. For all our charms, humans are innately prone to human error and inconsistent decision-making. Meanwhile, new AI-driven underwriting models are able to remove the subjectivity and process claims based on individual risk profiles, all while significantly reducing the burden on the applicant’s time posing questions and requesting medical examinations, and increasing time-to-decision.


Underwriters can set the rules and parameters of existing models for quick deployment, and update them easily in response to developments in the regulatory or health landscape. This will allow them to respond more quickly to significant and unforeseen new risks, such as a pandemic.

Every AI-processed claim can be underpinned by visible, comprehensive analysis on the risk implications and optimisation, as well as AI explainability to supplement the risk management and governance requirements of insurers and regulatory bodies.

Life insurers are increasingly happy to throw around terms like AI and machine learning (ML) to attract new customers and demonstrate that they, too, are moving with the times. But not all AI was born equal. And while customers may not know the ins and outs of what makes one AI system more advanced than the other, they are intuitively aware through what it means for their overall customer experience. Sure, it’s nice to have a chat bot answer your questions pronto, but it’s even nicer to have your claim processed in real-time.

Insurers should be keenly aware of the difference themselves, as well; a chat bot might clear up back-office backlog, but automated underwriting will actively take more customers from contemplation to decision and improve the bottom line.

With the increasing sophistication of AI, insurers and their customers need not be held at the mercy of risk-aversion. Businesses who are really pushing the fold of digital transformation are those deploying AI underwriting tools, mitigating the inconsistent judgements of human underwriters to deliver more accurate data-driven decisions to customers in real-time.

About alastair walker 11341 Articles
20 years experience as a journalist and magazine editor. I'm your contact for press releases, events, news and commercial opportunities at Insurance-Edge.Net

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