ChatGPT and AI are Winning Over the Life Insurance Industry.  Here’s Why.

ChatGPT and AI are Winning Over the Life Insurance Industry.  Here’s Why.

by: Dror Katzav, CEO and Founder

July 3rd, 2023

Life insurers and annuity companies have always been conservative when it comes to adopting new technology.  But when ChatGPT burst onto the scene, it was hard not to pay attention.  The benefits of using generative AI to increase productivity were too good to be true.  More efficient processing, more customer-centric approaches, and decreased lapse and surrender rates.  What insurer wouldn’t want that?  

If you think that ChatGPT has the potential to be a game-changer, just add predictive AI to the mix.  Now we’re talking about a whole new ballgame.  Here’s why.  

ChatGPT is Redefining the Customer Experience

When it comes to life insurance, ChatGPT gets brownie points for customer service.  Chatbots’ natural language processing allows for real-time conversations that make customers feel like they are interacting with humans. Since responses aren’t constrained to a script, a wide range of topics can be addressed, driving increased satisfaction and higher engagement.  

ChatGPT Powered by AI Predictive Models Makes the Magic Happen

ChatGPT is a baseline model that uses web scraping to collect data from various sources on the internet.  Data collected may not be accurate or relevant.  Companies who want to use ChatGPT for customized applications need to add their own data and intelligence.  That’s where predictive models come into play.

Predictive models were first used in the 80s to support the underwriting process with demand modeling.  In the 2010s, select companies started using AI for underwriting, fraud detection, customer service, predictive analytics, and more.  Then came ChatGPT in November of 2022.  ChatGPT put AI into the spotlight.  

AI algorithms improve predictive modeling by considering a broader range of factors and incorporating non-linear relationships.  Insurers can generate more sophisticated models that capture complex risk dynamics and provide more accurate projections. 

Combining AI machine learning with chatbot capabilities results in personal, proactive customer communications that benefit both customers and insurers.  Insurers can keep in touch with timely and personalized messages about policy renewals, policy changes, and payment deadlines.  They can also offer relevant new products and services. That’s the kind of engagement that builds loyalty and generates growth.  

It’s Still Early in the Game

ChatGPT made the insurance industry stop and take a good look at AI’s potential.   It’s not just a trend and it’s not going away anytime soon.  Neither are the AI models based on machine learning that ChatGPT promoted.  It’s early in the adoption curve, though. That’s not because interest is lacking.  It’s because carriers are just beginning to understand their data assets and how those assets can work for them.  It’s only a matter of time until AI is at the core of every life insurance enterprise.  Stay tuned and keep up with the latest.  This is just the beginning.