The claims industry is navigating a lot of change right now in the face of inflation, growing climate volatility and an ongoing talent shortage, but of all the disruptive factors, Lemonade’s Chief Claims Officer Sean Burgess says generative AI is the biggest.

“Let’s call out the biggest one for any industry, and that’s generative AI,” he said. “Simply stated, everything is changing…everything.”

He added that each component of a claim, whether it’s first notice of loss, investigation, negotiation, settlement or payment, will likely be impacted by generative AI in ways the industry hasn’t quite grasped yet.

“The speed, accuracy and efficiency it is bringing is like nothing the industry has experienced,” he said. “You don’t want to be the ones left behind here, that’s for sure.”

Kevin Rampe, executive vice president and head of North America Claims at Chubb, said the greatest opportunities he sees for AI in the claims process are centered on data and technology, with the ability to use data to better handle claims and drive the best outcomes.

“The main benefit is our ability to meet the policyholder where they are, to meet their needs and to ensure that we can do it in a way that reflects their lifestyles,” he said. “If they want to submit a claim digitally, then they can. If they want to talk to somebody, they can talk to somebody.”

“The world is rapidly growing and changing—the insurance world included—and if you don’t lean in, carriers will miss out.”

Sean Burgess, Lemonade

He said AI can be used to ask the right questions and introduce new efficiencies into the process by leveraging consumer data.

“We can move claims through the process more efficiently and help our claim professionals to focus on what we want them focused on, which is the claim, the adjudication and high-end customer service,” he said. “A lot of the other tasks can be handled by the technology and using artificial intelligence.”

Insurers can feel bogged down by the large amounts of data in the industry, both publicly available and internally within carriers, leading them to take a broader brush approach to addressing risk management in some cases, said Eric Sanders, chief claims and risk solutions officer for QBE North America.

“There’s too much data for a human to process,” he said. “But if you put AI on it, AI can help act like a funnel where it takes all of the data, and ultimately, it boils it down so that you can be more precise on where you aim your human efforts to drive risk mitigation.”

Frank Sapio, regional head of claims in North America for Allianz Commercial, agreed that there is much opportunity in the industry to improve upon and make use of the data with the help of AI.

“I have roughly 300 employees, and if I give them a loss description and ask them to pick the appropriate loss code out of a list of 50, I will likely get 20 different answers with half the people picking ‘other,'” he said as one example. “AI offers the ability to apply the collective knowledge of the organization to get to one code, which underwriters can then use to make better underwriting decisions.”

“At the end of the day, even with all of the shiny new toys, this is still a people business.”

Frank Sapio, Allianz Commercial

Sapio also sees AI being used to constantly scan existing losses and make reserve changes based on changing information within the individual claim file or in response to market forces, like inflation.

“Of course, we are not there yet, and it will take some time to get to that level of sophistication,” he said. “We will get there.”

Data, Data, Data

However, while most experts see AI as one of the biggest opportunities in the industry, it also can be the industry’s greatest challenge.

“For organizations, the immediate issue I see is data, data, data,” Sapio said. “AI and predictive analytics rely on clean data to learn. In my 30-plus-year career, the data that I have seen amassed has been anything but clean and complete. There are multiple reasons for this, ranging from simple human error in entry to failing to capture the information. Additionally, you have multiple legacy systems that have been replaced with new systems, and the data migration between them is a nightmare. If your data is incomplete, inaccurate or replete with bias, then your output will contain the same issues.”

He said for claims professionals, it’s important to ensure the data being used to train AI is clean and the technology is implemented responsibly across an organization.

“I would be very wary of the technology until it has proven itself reliable, and even then, it will still have to pass the common sense test,” he said. “Applying common sense and oversight will be critical as we bring on new technologies.”

“If you’re not embracing it, you’re going to fall behind. And it can be powerful if it’s used in the right way.”

Eric Sanders, QBE North America

While AI has the potential to solve many fairness issues seen in the industry today, Burgess added, it also has the ability to intensify these concerns if not leveraged carefully.

“As we continue to train and build AI into our products, we need to ensure our own conscious and unconscious biases are not incorporated,” he said.

Striking a balance between what can be automated and what needs to retain a human touch is critical as claims professionals move forward with new technology, according to Nandini Mani, executive vice president and head of Claims for Oversees General Insuranceat Chubb.

“We don’t think everything needs to be automated. If it doesn’t actually improve the service proposition, it’s not worth it,” she said. “We can’t forget what we do. We are here to adjust the claim. We are here to get to the right result, and we look at everything with that eye. So, AI is a tool. It’s not a substitute. At the end of the day, we have incredibly experienced people who handle these claims and bring value to the process, and I don’t see AI being a substitute for that, but AI can help speed the process along.”

Rampe urged insurers to remember that at its core, insurance is a people-focused business.

“It’s all about that human connection, and AI can’t and won’t to be a substitute for the empathy that we’re known for,” he said.

“The main benefit is our ability to meet the policyholder where they are, to meet their needs and to ensure that we can do it in a way that reflects their lifestyles.”

Kevin Rampe, Chubb

Investing in Talent, Eliminating ‘Brain-Drain’

One way insurers can utilize AI to retain the human touch within their business is in the talent acquisition process, experts said.

“I believe the war for talent will continue into 2024,” Sapio said. “We are seeing a slowdown in turnover, but the candidate pool is still very shallow for specialized talent. The industry has to do a better job of bringing in young, diverse talent to rebuild a workforce that is aging.”

David Lovely, chief claims officer at The Hanover Insurance Group, said at a time when many experienced professionals are retiring, AI and technology-based tools can help compensate for the “brain drain” carriers may be experiencing. It can also be leveraged to shorten the learning curve for early-in-career employees, accelerating the development of claims talent and making the job more attractive.

“AI and technology-based tools allow for faster, better and more consistent decision-making and have the potential to be used on more intricate customer-facing solutions in the future,” he said. “These tools allow us to be more responsive to our customers, focusing more energy on value-added claims management and less on administrative tasks.”

He said this approach to digitization can help address specific customer pain points and efficiency opportunities, while at the same time strengthening the diversity of thought in organizations through greater inclusivity.

“We don’t think everything needs to be automated. If it doesn’t actually improve the service proposition, it’s not worth it.”

Nandini Mani, Chubb

“There is a great opportunity in leveraging empathy to deliver a better claims experience and help claimants navigate complex processes,” he said. “We can identify additional ways to simplify processes and customer journeys, using what we call ‘smart digitization’ to improve the customer experience and drive efficiency.”

All of this, in turn, can help attract new talent and create new opportunities in the industry for those who have the skills to utilize AI within customer service and claims management.

“Ongoing industry education and rewarding compensation strategies can help retain the top talent,” he said. “As an industry, this is an opportunity to take a close look at the culture, benefits, work environments and recruiting efforts to ensure we’re meeting the needs and desires of employees across all generations. Similarly, building and fostering a strong culture within claims organizations is critical.”

‘This Is Still a People Business’

Whether it comes to talent acquisition, customer service or the use of data, Lovely said generative AI holds the promise of revolutionizing claims, but there is much to learn before insurers jump in feet first.

“Of course, it can be scary,” Sanders added. “But again, if you’re not embracing it, you’re going to fall behind. And it can be powerful if it’s used in the right way, in my opinion. That doesn’t mean just send it off on its own to do everything that a human does. It’s really more about how you position it to assist so that we can do our jobs better.”

Burgess agreed.

“The world is rapidly growing and changing—the insurance world included—and if you don’t lean in, carriers will miss out.”

That said, Sapio offered his advice that no matter how technologically advanced the industry becomes, insurers should always retain their people-first mindset.

“Focus on your people, get them ready to take on the challenges and opportunities that are sure to come in 2024,” he said. “Investing in your people to build a motivated, disciplined and well-trained workforce allows you to overcome many obstacles in your technology and processes. At the end of the day, even with all of the shiny new toys, this is still a people business.”