Authors: Simona Scattaglia, Global Insurance Technology Lead, KPMG International and Partner, KPMG in Italy, Ilanit Adesman-Navon, Head of Insurance and Fintech, KPMG in Israel and James Henderson, Customer Insurance Director, KPMG in the UK
The insurance sector is built on the ability to manage risk and forecast the future. While many organizations are already transforming to meet the expected demands of both regulatory requirements and consumer needs, new and emerging technologies could offer a host of potential benefits to those that are willing to embrace change. Integrating these technologies could further enable precise predictions, manage customer interactions and expand the personalized service and product lines with unprecedented accuracy and speed. So, how prepared is the insurance industry to harness the latest technologies to help shape the future?
Many successful insurance companies are riding this wave. Some are adapting their product offerings and distribution methods — think comparison sites, Internet of Things (IoT) and usage-based policies.
Artificial intelligence (AI) isn’t new in insurance — existing use cases are seen across risk modeling, data forecasting, claims handling and contact center operations, with an abundance of potential opportunities in the pipeline.
Simona Scattaglia, Global Insurance Technology Lead and Partner, KPMG in Italy, highlights the promise and wide impact, “CEOs recognize that AI and Generative AI are technologies with huge potential for their business, because they touch on so many core aspects of what insurers do.
AI models can simulate future scenarios, enhance the accuracy of risk estimation and drive better pricing. They can also identify false claims more effectively. There are powerful AI applications for the
insurance industry and it will likely force innovation in many areas.” Yet, a reliance on legacy systems poses a challenge to innovation. While existing technologies provided the level of support previously required, and gave stability during the global pandemic to help insurers weather macroeconomic pressures, the same systems could now be holding them back. And with several tech giants intent upon disrupting the insurance market, it’s clear that traditional insurance products are struggling to keep pace with emerging customer lifestyles.
By integrating AI, innovation in insurance could find another gear. For many, the journey starts with centralizing data and transitioning outdated systems to cloud architectures. Aligning tech stacks and operations with the evolving needs of businesses, customers, partners, and distributors is ongoing, but the level of effort and investment are further signs that insurance products and services are ripe for innovation. However, insurance leaders should also be aware of the associated challenges and risks that accompany the technology and look at how to protect both the organization and consumer, by developing an understanding of the risk and action required to overcome these.
Leaping into the known unknown of AI
AI is evolving at pace, and there’s a lot to learn. That isn’t deterring insurers as revealed in theKPMG global tech report 2023where 52 percent of respondents picked AI (including machine learning and GenAI) as the most important technology in helping them achieve their ambitions over the
next three years.The KPMG 2023 Insurance CEO Outlookalso highlights a significant degree of trust in AI with 58 percent of CEOs in insurance feeling confident about achieving returns on investment within five years.
