AI Implications and Practical Application for Core P&C Insurance Processing

By Patrick O’Neill, Founder and President, Redhand Advisors and Jose Tribuzio, Chief Technology Officer, Spear Technologies

Artificial intelligence is already in play across the insurance world, and the future is bright for additional uses for AI tools, especially in the workers’ compensation space.

Artificial intelligence (AI) has entered mainstream consumer consciousness due to the recent launch of frontier AI tools such as ChatGPT and other generative AI applications. Their potential uses are being discussed across nearly every industry, including insurance.

Many of the processes involved in the insurance industry, especially workers’ compensation (WC) insurance, are tedious and labor-intensive, including customer service, claims processing and fraud detection, risk assessment and underwriting, and compliance. Thus, the industry is ripe for digital transformation.

And now that consumers are familiar with the benefits of AI tools, they demand the thoughtful incorporation of artificial intelligence in every piece of technology they touch. A PwC survey revealed that as many as 41% of consumers would be more likely to switch insurance providers due to a lack of digital capabilities.

AI can significantly impact workflow and efficiency by automating certain processes, such as mining the descriptive fields of claims to help insurance companies make the right decisions. Analyzing data more efficiently isn’t new, but the machine learning-driven AI tools that exist today can do so more quickly than the software of the past. Older models were limited by the manual coding required to develop them; natural language processing (NLP) makes this concern a thing of the past. Additionally, AI-driven cybersecurity tools can assist in keeping personal identifiable information safe by making sure it is stored/hosted in secure systems.

Generative AI models such as ChatGPT and AI-driven virtual agents such as GitHub Copilot enable the automation of software development and writing. In no more than 5 to 10 years, people won’t be writing code the way they are today; they will type their desired outcome into a generative AI tool and be handed a fully-functional program. Currently, ChatGPT produces some errors when used regularly.

This is the high-level promise of large-language AI tools. Insurance related organization such as carriers, risk pools, self-insured groups and claims administrators who are ready for automation will, someday, in the near future, use this technology to develop systems for handling the labor-intensive tasks mentioned above, and likely more we haven’t even thought of.

How do we make sure we’re using AI correctly?

It’s easy to get overwhelmed when thinking about the potential use cases for AI in the insurance space, but take it one step at a time. Right now, AI tools can help you get started on your mission to speed up your development. It’s not going to be perfect immediately; it will need to be monitored and tweaked as you go, and ethical ramifications should always be considered.

For example, you could ask your AI platform to create a workflow to generate a referral to an external vendor such as a field adjuster or medical management when certain conditions are met, then you can test it by having it run through some test data that it generates on its own.

We’re years away from asking AI to do something and not checking its accuracy, and we may never fully get there. But we can currently ask it to do a task and then perform a quality check on it. Ultimately, this route is still more efficient, and it will only continue to get more efficient as the AI learns.

How is AI changing WC insurance?

While much of what we’re discussing is future-focused, there are things we can envision improving now based on the technology as it currently exists.

· Enhancing the customer experience. Generative AI supported by machine learning can be employed to enhance customer service and support by providing personalized and rapid, custom-tailored responses to customer inquiries about their WC claims. When trained right/deployed correctly, AI can handle a wide range of customer questions and concerns, including policy information, claims processing, coverage details, and general inquiries. By using AI-powered chatbots, servicing organizations can improve customer satisfaction, reduce wait times, and streamline support operations. As chatbot technology evolves, the benefits will continue to improve.

· Speeding up analysis. Companies can ask AI tools to create software that will develop a script for a specific function, such as analyzing sentiment and sending a notification if the sentiment is negative. While it might not be 100% accurate, it can still be helpful. You can also ask AI to perform calculations for you, which it can do quickly. Additionally, by leveraging AI for the automated routing of claims, it can lead to swifter resolution and better efficiency.

· Making reporting easier. Certain AI tools allow you, for example, to see all your claims with reserves of more than $10,000 and payments within excess. You simply describe what you want to be reported, and the system will show it to you. It doesn’t always want to share, but you can use it later to streamline your analytics and reporting. Moreover, the extent of damage can be assessed through programmed analysis of claims records and by cross-referencing with external data founts, like meteorological reports.

Best practices as we look to the future

Most of the AI tools in use today – even the frontier models like ChatGPT – are still in their infancy, but being on the cutting-edge of this technology will put you in a great position to implement future, more robust iterations of AI. Start by building out a prototype to see what the different capabilities are and how you might use them. Implement and integrate AI tools into internal workflows first. Above all, don’t be afraid to try new things.

Insurance is often viewed as an old-fashioned, behind-the-times industry, but that doesn’t have to be the case. Even if you start small and gain a little efficiency here and there, you’re on the right track.

About Redhand Advisors

Redhand Advisors offers tailored RiskTech consulting services to help organizations select the right technology for their needs. Our core competencies include Risk Management Information Systems (RMIS), Enterprise Risk Management (ERM) software, Governance Risk & Compliance (GRC) platforms, insurance claims management software, insurance policy underwriting software, and specialized solutions.

About Spear Technologies

Spear Technologies is an insurance software solution company that develops, and services, core systems primarily for the property and casualty space. Spear’s solutions, including SpearClaims, are based on the Microsoft™ technology stack, with the most modern solutions taking full advantage of the low code/no code Microsoft Power Platform™.