Generative AI to boost the insurance sector by $50b

Investing in generative AI could boost revenues by 20% and minimise costs by 15%.

Insurance businesses worldwide have a significant financial opportunity of $50b from generative AI, potentially increasing revenues by 20% and cutting costs by 15%, research from Bain & Company revealed.

“For insurers, benefits due to generative AI will come through three routes,” Bhavi Mehta, global lead of AI in Financial Services at Bain said in a media release. 

“This includes raising productivity, lifting sales through more effective agents and digital advice, and better risk identification and targeting that will help customers, agents and the enterprise. At Bain, we remain committed to helping our clients not only within insurance ‒ but across industries ‒ identify and realize AI’s full business potential,” Mehta added.

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Generative AI is expected to transform insurance distribution in four key ways:

• Agent productivity: Speeding up content production and coaching agents for more effective interactions.
• Customer self-service and sales support: Providing an always-on virtual assistant for product comparisons and digital purchases.
• Hyper-personalization at scale: Offering tailored conversations, content, and offers to meet individual customer needs.
• Business insights and decisions: Utilizing unstructured data combined with structured data for new insights and risk identification.

However, Bain's analysis identifies key risk areas, including hallucination, data provenance, misinformation, toxicity, and intellectual property ownership.

Sean O'Neill, leader of Bain's global Insurance practice, emphasises the importance of a responsible AI strategy to manage these risks and suggests critical steps for insurance leaders to adapt to generative AI. 

“To manage risks, insurers should adopt a responsible AI strategy that includes short-term priorities, as well as a long-term vision enabling companies to build valuable AI capabilities to redefine their business operations.” O’Neill said.