A Digital Balancing Act: The Pros and Cons of AI Application in the UK Insurance Sector

Conversations around Artificial Intelligence (AI) driven tools and its applications within the UK Insurance industry have once again become a key trending topic in 2023.

Contrary to popular belief, the use of artificial intelligence to support customer service is not new. Early AI technology dates back as far as the early 1930s when Georges Artsrouni invented a machine that he called the “mechanical brain” – a purpose-built machine translator that could decipher encrypted messages thanks to its capability to print and retrieve stored information.

In the 1960s, Joseph Weizenbaum pioneered generative AI with Eliza, the first chatbot, capable of simulating conversations using a basic algorithm. Since then, Large Language Models like OpenAI's Chat GPT, built on these foundations, have propelled recent advancements in artificial intelligence to the forefront of defining what the future holds in terms of customer experience.

Last week, AI took over Insurance Post for its inaugural AI Week for five days. Tom Quirke, Chief Actuary at Ageas Insurance shared an insight into how Ageas has been utilising AI technology. In 2020, Ageas became the first UK insurer to use AI technology from Tractable for end-to-end damage assessments and estimates in vehicle collisions.

Ageas is currently working on a prototype AI assistant that will be able to assist claims handlers in carrying out routine and repetitive tasks. According to Quirke, one of the key benefits of adopting AI-driven tools and processes is the increase in efficiency, which ultimately leads to better outcomes for clients. With the help of the AI assistant, customer-facing professionals will be able to focus on their areas of technical expertise and build stronger customer relationships.

Where it is clear there is a positive indication AI can benefit the customer-client relationship, there are also growing concerns that relying on AI applications may lead to a loss of the human touch in customer-focused sectors. The implementation of AI processes opens the possibility of automating poor processes. Many of us have had experiences with online chat bots that fail to provide the answer we need. If not implemented correctly, insurers run the risk of automating and repeating a negative experience for their clients.

AI's potential to adopt "unwanted behaviours," has already led to calls for proportionate regulation of AI technology. AI models not being able to detect bias has resulted in the creation of what is being dubbed "racist models."

It's important to recognise that even though AI has strong pattern recognition abilities, it cannot replace the real-world knowledge and experience of humans. While it may become inevitable for AI to take over certain tasks such as call handling as the technology advances, it's more likely that it will be used as a tool to work alongside existing staff, enhancing their skills and ultimately leading to a better customer experience.