AI evangelists proclaim that the technology will change lives by essentially freeing up humanity to do things that software never will in areas such as teaching patient care and supporting the elderly.5 They also proclaim that AI will help scientists develop vaccines, teach students math, and serve as a personal and professional assistant by going through a person’s email inbox and scheduling meetings.6
Some of that is already coming true. Within 72 hours of OpenAI’s release of the first free version of ChatGPT, physicians began using it to help communicate with patients about medical recommendations and to help communicate empathy with respect to patient suffering.7 Millions are now experimenting with free standalone chatbots ChatGPT, Bing, and Bard.8 LLMs are available to summarize text, draft and explain copy, compose emails, and analyze spreadsheet data.9
Process Improvement and Greater Productivity
Early indicators reveal AI’s potential to unleash staggering productivity gains. Two M.I.T. doctoral students found that with ChatGPT, grant writers, data analysts, and human-resource professionals produced news releases, news reports, and emails in 37% less time, 10 minutes less on average, with superior results.10 Separately, Goldman Sachs predicts that AI could drive a 7% (or almost $7 trillion) increase in global GDP and boost productivity growth by 1.5 percentage points over a 10‑year period.11
Insurance-related applications quickly come to mind, allowing our industry to, at long last, move past the “data rich but information poor” paradigm by capitalizing on institutional unstructured data as well as on customer-supplied information contained in wearables, telematics, and sensors.12 Some predict that the first lines to feel the effect will be Personal and Small Business, as AI – supported by machine and deep learning – will reduce underwriting decisions to a few seconds.13 On the claims side, AI will be able to manage claims triage, generate repair estimates, detect potential fraud, and interact directly with the policyholder, in turn freeing up claims staff for complex matters.
Some government officials, regulators and analysts have expressed alarm that AI’s use in hiring, promotions, succession planning, and layoffs could give rise to a rash of discrimination-related litigation fueled by allegations of algorithmic bias and/or inaccuracy.14 While the number of AI discrimination suits remains scant so far, observers note that the ever-inventive plaintiffs’ bar will tap into a ready-made framework to bring them.15
AI-generated job loss concerns many currently employed in the insurance industry. To that end, a recent survey found that 72% of respondents indicated AI will reduce the number of underwriters in the insurance industry, with 82% indicating technology in general would negatively impact the scope of their roles.16 History suggests that won’t be the case, as evidenced by the precedents that implantation of international fiber-optic cable didn’t wipe out one-fifth of U.S. jobs (as had been predicted two decades ago) and that self-driving trucks would eliminate the need for human drivers (as had been thought ten years ago).17
Regardless, societal concerns extend beyond job loss, with some expressing sentiment that generative AI is analogous to releasing something dangerous into the wild.18 One immediate concern is that generative AI will flood the internet with false photos, videos, and texts unrecognizable as false to the average person.19 Another concern is that future versions of the technology will threaten humanity because it often learns unexpected behavior from the data it analyzes, moves from generating code to actually running it, and then potentially brings to reality truly autonomous weapons and killer robots.20 And, above all else, apprehensions abound that bad actors will use AI for corrupt purposes to drive up social inflation, foment societal unrest, and escalate hacking and cyberattacks.21 Because of these concerns, some tech and governmental leaders are calling for regulation with diverging opinions as how to best do so.22
A Look Into the Future
AI’s integration into the insurance industry is in its infancy, with carriers and consultants taking their first steps into the AI‑infused future. Whether those tentative first steps turn into a full-fledged gallop remains to be seen. Either way, at the core of the insurance industry are human beings, and it is humans who will ultimately be responsible for underwriting, claims, and marketing decisions. With that in mind, AI should be seen as a potentially invaluable tool, and in large measure as an outgrowth of the industry’s use of probabilistic modeling to predict profitability, individual claim values, and loss portfolio performance.