According to a study by AI Intelligence and Analytics Evident, the global insurance industry is seeing an 87% year-over-year increase in the adoption of artificial intelligence. And as we look around for real-world examples of AI implementation in the wild, around 40% of insurance companies are already reporting tangible business benefits from AI, with 77% of those benefits coming from increased productivity and 5% related to increased revenue.
These statistics are based on a survey of 30 major life, property and casualty (P&C), general insurance, and reinsurance groups in North America and Europe, which also highlighted significant interest in agency use cases. According to data from Evident, more than a fifth (21%) of adoptions in the last three months of last year were agent in nature, and the technology is considered well-suited to handling the unstructured data and complex workflows involved in claims management, which accounts for more than half (56%) of agent adoptions to date.
Elsewhere, McKinsey argues that generative AI is one of the most important opportunities for value creation in the insurance industry, with the potential to generate $50 billion to $70 billion in revenue, and that the technology is particularly suited to document-intensive processes such as issuing insurance policies and processing claims.
McKinsey’s analysis suggests that key benefits will be found in marketing and sales, customer operations, and software engineering, as well as the ability to simplify processes such as quoting, filling out application forms, and processing approvals on carrier websites. In the future, we predict that agent AI will be able to handle simple risk updates with limited human intervention.
That’s okay, yes? Well, almost. Bank of America’s Global Research division is throwing cold water on all of this, estimating that more than $15 billion in insurance industry commissions are ripe for AI disintermediation, which is considered “low complexity” and while that could mean cost savings for employers on the one hand, it’s a less appealing prospect for insurance company employees in the trenches…
Aviva’s AI is in action
That’s the theory. What is the reality on the front lines? Over the next three days, we’ll look at three examples in this area. We start with Aviva, a multinational company based in the UK and serving 25.2 million customers across the UK, Ireland and Canada.
AI will transform the insurance industry, says Group CEO Amanda Brann. This is a sentiment echoed across all three of our principals, she argues, and Aviva is well placed to take advantage of what’s coming.
There are key enablers needed to actually drive value. Having the technology is not enough. You need access to millions of customers, the ability to deploy and reuse at scale, the ability to invest, and most importantly, your own customer and claims data. Aviva has all this and our diverse models are more resilient to any disruption.
AI is not new to Aviva, she says.
We have been using traditional AI capabilities for over a decade. In fact, over 98% of UK Personal Lines’ retail business is priced using machine learning. And over the years, we’ve trained over 150 machine learning models in claims using our own data. Generative AI and agents are just the next step in this journey.
As a result of investments to date, much of the necessary AI-enabled infrastructure is in place, she says:
We have built an internal platform to rapidly deliver use cases and are already seeing tangible benefits. The time required to review each case in medical underwriting operations has been cut in half. We also reduced call wrap times for Direct Wealth customer service agents by 20%. We are now rolling this out more broadly in IW&R (Insurance Wealth and Retirement).
She added that all Aviva employees have access to AI tools, but she suggests it is still early days in terms of what the organization can achieve.
We’re proud of what we’ve achieved so far, but we aim even higher, always balancing ambition with pragmatism. Our focus now is to prioritize the growing end-to-end opportunities that AI can transform, from areas like customer engagement and distribution to underwriting and claims to back-office operations. This is the kind of change that will shape the future of Aviva. And some of it is closer than you think.
Pointing to the UK general insurance claims sector, she argues:
We have already saved nearly £100m through claims transformation and Agentic has the potential to do even more. Over the next few months, we will be testing an AI-enabled claims agent that is built in-house and will be released later this year. This allows simple claims to be processed from start to finish without human assistance. And the best part is that it is voice-enabled. Most complaints begin over the phone. Therefore, this is transformative for customers, delivering faster, clearer, and more consistent results.
A seemingly obligatory partnership with OpenAI has also been proposed, which Brann positions as “a very important step for us” (and every other organization known to humanity, hey!). She claims:
By combining OpenAI’s cutting-edge capabilities with our expertise and data, we will be able to deliver powerful AI solutions to our customers and colleagues.
disintermediation
That’s all good news and a positive outlook for Aviva. But what about the disintermediated impact of AI technology on the insurance sector’s business model, as hinted at by Bank of America? Bran says:
I think that disintermediation has been carried out in many places so far. Let’s take price comparison sites as an example. In short, this has revolutionized the car market, eliminating middlemen almost entirely, and today an estimated 95% of them do so. As mass affluent, we are perfectly placed to address potential disintermediation.
I still believe that [human intelligence] The advice will be there, but I just think advisors will be given better information and more support and spend more time with their clients if they want face-to-face advice.
But I don’t think many people, 91% of today’s population, would take the advice. AI facilitates the ability to do that and means better guidance is available. There are currently 12.5 million people in the UK who do not have enough saved for retirement. I think this is a real opportunity to be able to do that.
my view
I would say we’re kind of nearing the end of the excitement in terms of that opportunity. [AI] We offer Aviva.
In a strangely understated way, Brann summed up what Aviva clearly sees as its main weapon of competitive leverage in what she describes as an “arms race” in the insurance industry.
Next up is AXA.
