Artificial intelligence (AI) and generative AI (GenAI) open up great potential for insurance companies in times of upheaval. Whether for automated claims notifications, risk assessments, personalising offers or combating cybercrime, insurers are increasingly relying on AI to efficiently manage complex tasks and optimise processes. Nevertheless, there is an urgent need to accelerate the introduction of these technologies. After all, generating competitive advantages is only possible if AI is implemented holistically. Pilot projects are not enough.
How can insurers use AI effectively and utilise the technology's potential?
With this white paper, we support managers in the insurance industry in the targeted use of AI to transform their companies. The analysis also includes insights from our experts and industry leaders such as Generali Italia, PassportCard, Prudential and Zurich Australia. They share how they believe the potential of the technology can be maximised.
The most important results at a glance
How do insurers deal with AI?
The market for AI in the insurance industry is forecast to grow to 79 billion US dollars by 2032. Executives recognise that AI can transform operating models and the customer experience. However, many insurers are adopting the technology strategically and cautiously. The use of machine learning (ML) and other AI technologies is already optimising processes in risk assessment and fraud prevention. AI-supported applications, such as voice recognition and chatbots, are also increasing efficiency in customer service.
With sufficient training data, algorithms can analyse risks more precisely and improve predictions, which increases the accuracy of risk models and pricing structures. Both conventional and generative AI can help insurers to optimise actuarial models, offer personalised protection or speed up claims processing. However, testing and implementation phases often take several months, which delays progress.
It is becoming increasingly clear that the success of AI is closely linked to a company's digital transformation. AI thrives on high-quality data and benefits from cloud-based infrastructures and agile operating models. Companies that still have deficits here recognise the urgency of adapting this.
Managing the risks of AI
Generative AI is seen as both beneficial and detrimental by 85 per cent of CEOs in the insurance industry. Although AI supports cyber defence, it can also open up new attack opportunities for criminals. Companies should consider these potential risks when developing AI solutions:
- Confidentiality risks
- "Hallucinations" of generative AI that lead to inaccurate results
- Data falsification
- ESG and reputational risks due to AI performance requirements
- AI-related concerns of employees
Not using AI could also harbour risks, including the loss of potential opportunities and competitive advantages. Without the use of AI, both knowledge and the ability to develop new products and processes are reduced. In addition, the risk of being overtaken by technologically more advanced competitors increases.
How KPMG experts can help
KPMG combines deep industry and domain expertise with technology to unlock business value through AI quickly, flexibly and securely. KPMG works with insurance companies worldwide to drive sustainable AI transformations, combine industry knowledge and deep insights with leading technology partners, and develop robust AI frameworks. KPMG's expertise includes:
- An AI 360-degree assessment of in-house capabilities and integration of AI into your strategy
- Development of use cases and AI operating models in line with your objectives
- Risk assessment and governance frameworks for the use of AI
- Creation of a data basis and support for model development and optimisation
- Concept development in collaboration with global alliance partners to scale AI solutions
- Analysing the impact of the transformation on employees and the entire company
Your contact
Stefan Heyers
Partner, Financial Services, Head of Insurance
KPMG AG Wirtschaftsprüfungsgesellschaft