Insurers Adopt AI for Growth, Penetration

In search of ways of achieving growth and  penetration, insurance sector operators see adoption of Artificial Intelligence as the new way to go, writes Ebere Nwoji

Artificial Intelligence (Al), one of the disruptive innovations trending among many business sectors   has been endorsed by insurance sector operators as game changer and  a technology that could improve their service delivery, enhance customer experience and productivity as well as improve their profitability.

Given these inherent advantages in the technology, leaders in insurance sector believe the future of the sector lies in the full adoption of the technology.

The Commissioner for Insurance, Mr Sunday Olorundare Thomas, said he has seen AI as key to the future of insurance business in Nigeria.

He urged insurance operators to adopt the technology.

Experts described  Al as  a technology that enables a computer or computer-controlled robot to perform tasks commonly associated with human beings—such as the ability to have human-like conversations, reason, discover meaning, generalise or learn from past experience.

The Al technology has gained so much popularity in businesses that analysts put  global business value earned through artificial intelligence at  $3.9 trillion in 2022, from $1.2 trillion in 2018. 

With lack of awareness problem of insurance and Nigerians’ alienation to insurance services, the technology is believed to be capable of bridging the gap between the masses and insurers, help in bringing insurance very close to the people.  

AI defined

In trying to define AI, research firms view it as technology that appears to emulate human performance typically by learning, coming to its own conclusions, appearing to understand complex content, engaging in natural dialogs with people, enhancing human cognitive performance or replacing people on execution of  non routine  tasks.

According to them its applications range from autonomous vehicles to automatic speech recognition, as well as detecting novel concepts and abstractions, which they noted would  be useful for detecting potential new risks and aiding humans to quickly understand very large bodies of ever-changing information.

On how Al could change insurance and enhance performance in various aspects of insurance, global insurance giant, Allianz, through its risk and technology experts spoke of its experience in the usage of the technology.

It said the  insurance industry was believed to be among those with the highest potential value from AI technologies, which could add a potential $1.1trn annually.

It said AI technologies would allow insurers to draw on larger datasets to improve their processes, from automating customer support to honing risk modeling and predictions.

 claims payment wise, Allianz experts said Data-driven assets and AI could transform claims management, including prevention, notification, settlements, and fraud detection.

Considering these advantages Thomas, speaking at a forum in Lagos recently urged insurance operators to increase adoption of AI,  insisting that it improves service and enhances profitability. 

He said insurance consumers would experience another dimension in quick service delivery and claims payment if operators could adopt the technology.

According to him  AI was captured as part of the 10-year roadmap of the insurance industry, as he said that  NAICOM, as a regulator, would  continue to evolve policies that would engender the growth of the industry, increase penetration and contribution to nation’s GDP.

The Chairman NEM Insurance Plc, Tope Smart, described AI as a game changer in an industry that still bestrides the low rungs of financial necessity across Africa. 

He said with AI adoption, insurers could  achieve a lot and intervene in several areas which would include customer satisfaction, engagement, risk management and assessment and, in pension.  

“There will be  upgrades in the service of retirement benefits, life expectancy and an avalanche of areas.” Smart said.

He concluded by saying that AI intervention was needed in all areas of operations.

Pushing for unabated penetration, Smart said low enforcement was  a snag adding that this has  made compulsory insurances a far cry from what it should be. He therefore charged all stakeholders to be united to realise the objectives of AI penetration. 

“It is quite saddening that out of a population of 200 million, only about 3 million people are actually insured. Lack of enforcement is a challenge but the industry is working round the clock to increase enforcement through the regulatory and enforcement bodies”; Smart said.

The president, Chartered Insurance Institute of Nigeria(CIIN), Mr. Edwin Igbiti, said growing insurance industry would  require that the nation’s economy be DE risked, while seeking partnership with government and other stakeholders to deepen insurance penetration.

He was of the view that AI would  increase insurance premium, enhances service delivery and ensures insurance sector contributes more to the nation’s gross domestic product(GDP)

On its application on claims settlement Allianz experts said in transforming claims management AI and data-driven assets are being implemented at Allianz to prevent loss and improve the claims journey.

They said inbuilt weather alert tool predicts the location, timing, and impact of extreme weather events, with 96 percent of customers saying they take steps to prevent damage as a result of an alert. The tool has 1.9 million registered customers.

Allianz experts said another AI tool detects motor accidents in real time using an app and tag on windshields, or via sensors in connected cars or smartphones. With 40,000 active users, it provides simple and digital first notification of loss, allowing Allianz to initiate contact with the client.

Claims assessments and settlements: Allianz experts said AI assets enable immediate coverage checks, more efficient claims assessments and solutions, such as automated preassessments in motor insurance and an extensive repair shop network, and faster assessments of low claims for efficient settlements.

Detecting fraud: They said AI-based tools efficiently utilise available data to check for fraudulent activity, including deceptive language, inconsistencies, or unusual behaviors; manipulated images or video evidence; predicting the likelihood of fraud based on historical data; and social network analysis to uncover fraudsters among claimants, insured persons and witnesses.

On its overall impact on insurance value chain, Allianz experts said the  new technology means insurers would  be able to draw on larger datasets to improve their processes, from automating customer support and manual tasks to honing risk modeling and predictions. 

Furthermore they said it  would also facilitate data entry, data cleansing and the classification of data.

They said a  wider range of risk data would enable underwriters to offer more targeted, bespoke insurance solutions and smarter pricing. GenAI will also automate underwriting tasks, including data extraction and wording comparison.

But despite these positive side , the experts said AI has some negative sides that could be detrimental to both individual and corporate bodies .

According to them, along with the opportunities offered by AI come risks around data protection, confidentiality, the threat of cyber-attack, ethical concerns, and liability exposures abounds.

Accelerating cyber-attacks

IT technologists said threat actors were  using AI-powered language models like ChatGPT to write code. 

They also observed that GenAI could  help less technically proficient threat actors write their own code or create new strains and variations of existing ransomware, potentially increasing the number of attacks they can execute. 

“We can expect an increased utilisation of AI by malicious actors in the future, necessitating even more stronger cyber security measures,” explains Rishi Baviskar, Global Head of Cyber Risk Consulting, Allianz Commercial. 

He said AI could be used to carry out more automated attacks, as well as develop new techniques to steal or poison data. 

He said, “When you think about the potential to combine AI with the proliferation of the Internet of Things (IoT) and the speed of 5G, for example, we may have serious issues on the horizon.”

 They also stressed on the voice simulation software adding that there had been a recent addition to the cyber criminal’s arsenal.

According to them, in  2019, the CEO of a British energy provider transferred €220,000 to a scammer after they received a call from what sounded like the head of the unit’s parent company, asking them to wire money to a supplier. The voice was generated using AI [4]. 

Similarly he said in  August 2023 researchers documented instances of deep fake video technology designed and sold for phishing scams. The going rate Just €250 for a full video. 

They however assured it wasn’t all bad news as AI would  help threat actors, but it is also a powerful tool for detection.