Generative AI

in insurance:
Trends, benefits,
and challenges
Generative AI in insurance: Trends, benefits, and challenges

Contents
Introduction from Roi Amir, Sprout.ai..........................................................03

Summary of findings....................................................................................... 04

Insurance and generative AI today..............................................................05

Opportunities and benefits............................................................................06

Unlocking widespread adoption.................................................................. 08

The future of insurance..................................................................................09

Key takeaways................................................................................................... 10

About Sprout.ai/Methodology....................................................................... 11

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Generative AI in insurance: Trends, benefits, and challenges

Introduction from Roi Amir, Sprout.ai

In recent months, Generative AI has taken departmental perspectives. It is now top-of-
the world by storm. Every industry is taking the agenda for insurers at the Board level.
note of the opportunities presented by this
cutting-edge technology that is capable of In this report, we present the results
using datasets to generate realistic images, of an extensive survey into attitudes,
audio and text. Within the insurance industry opportunities and challenges surrounding
alone, AI is valued to be worth $35.77 billion generative AI in the insurance industry.
by 20301. The opportunities for creating The findings reflect an industry ready to
efficiencies and improving the customer embrace this exciting new technology in
experience are exciting and plentiful. order to improve the experiences of the
people working in it, and every person who
Often, insurance companies lag behind takes out an insurance policy.
when adopting new technologies2.
However, we are seeing an interesting The data in this report was gathered from
market response to generative AI. Over our research conducted in April 2023 in
half of the insurers we surveyed have collaboration with Opinium on the attitudes
already implemented the technology, or of more than 100 UK and US insurers
are considering doing so. The hype around towards generative AI.
ChatGPT3 has demonstrated the potential
of generative AI from both operational and Roi Amir, CEO, Sprout.ai

1 Data Bridge Market Research. (2022). Global Artifical Intelligence (AI) in Insurance Market - Industry Trends and Forecast to 2030. Available at: https://
www.databridgemarketresearch.com/reports/global-artificial-intelligence-ai-in-insurance-market
2 McKinsey. (2017). Digital disruption in insurance: Cutting through the noise. Available at: https://www.mckinsey.com/~/media/mckinsey/industries/
financial%20services/our%20insights/time%20for%20insurance%20companies%20to%20face%20digital%20reality/digital-disruption-in-insurance.ashx
3 Digalaki, E. (2023). ChatGPT and Generative AI in Insurance. Available at: https://www.insiderintelligence.com/content/chatgpt-and-generative-ai-in-
insurance

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Generative AI in insurance: Trends, benefits, and challenges

Summary of
findings
59% 35%
Reported that their Reported already using
organisation is already using generative AI in their processes
generative AI

54% 61%
Feel marketing and claims hold See improving the efficiency
the greatest opportunity for and productivity of staff as the
generative AI biggest benefit of generative AI

47% 45%
Feel training staff is the biggest Cited the cost of generative AI
barrier to implementing as a concern
generative AI

22% 60%
Worried that they would not see Think the hype around
a return on their investment ChatGPT and Generative AI has
placed automation at the top of
the agenda at Board level

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Generative AI in insurance: Trends, benefits, and challenges

Insurance and
generative AI
today

How far have insurers already

embraced generative AI?
The insurance industry is often seen other areas, such as Environmental, Social
to be playing catch-up when it comes and Governance in the UK market6 when
to the latest technology4. However, our prioritising innovating processes.
research found that 59% of those surveyed
in both the UK and the US have already It is important for insurers to keep pace
implemented generative AI technologies, with the adoption of this technology.
such as ChatGPT. Middle Managers and When asked about the attitudes towards
above are significantly more likely to be generative AI in their customer base, 47%
currently using generative AI technologies and 55% of respondents in the UK and
compared to those in more junior positions US respectively said their customers had
(62% vs 18%). positive opinions of the technology.

In the UK, 27%5 of insurers are currently This shows in no uncertain terms,
using generative AI in their processes. consumers are aware of generative AI. They
In contrast, in the US this figure is 40%. understand it and want to use it. It will soon
This notable difference perhaps reflects a become something they expect from their
lower risk appetite or a stronger focus on insurers, rather than a point of difference.

4 McKinsey. (n 2).
5 Figure is indicative only as there were fewer than 50 UK insurer respondents
6 Frohling, P. and Bakor, K. (2022). ‘ESG and access to capital: Why insurers must stay focused on ratings’, EY Parthenon, 19 December. Available at: ey.com/
en_gl/insurance/esg-and-access-to-capital-why-insurers-must-stay-focused-on-ratings

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Generative AI in insurance: Trends, benefits, and challenges

Opportunities
and benefits
Generative AI’s versatility creates the opportunity to revolutionise a multitude of business
areas within the insurance industry. Its capabilities go much further than generating human-
like text in the manner of tools like ChatGPT.

When we asked our respondents which business functions would benefit the most from
generative AI, over half (54%) said marketing and claims, closely followed by administration
(47%), underwriting (46%) and customer onboarding (43%). Actuary and legal/regulatory
functions came next at 22% and 21% respectively.

Improving the human experience for both employees and customers emerged as a key benefit
of generative AI for insurers. The leading benefit if implemented in their organisation was
improving the efficiency and productivity of staff (61%). Providing better customer service was
also rated highly (48%). It seems that a human-first approach to implementing generative AI is
a priority for insurers, who want to use the technology to enhance people’s experiences, rather
than remove them from the organisation and its processes. Cost savings (56%) and business
growth (48%) were also found by respondents to be benefits of implementing generative AI in
their organisation.

With Sprout.ai’s generative AI driven policy checking solution, claims handlers can review
policy documents in seconds7. This increases the efficiency of the claims process, reduces
operational costs and gives claims handlers time to focus on providing a high quality service.

7 Sprout.ai. (2022). Responding to rising customer expectations in insurance. Available at: https://resources.sprout.ai/consumer-research-report

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Generative AI in insurance: Trends, benefits, and challenges

59% of insurers report

that their organisation is
already using generative AI
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Generative AI in insurance: Trends, benefits, and challenges

Unlocking
widespread
adoption

What are insurers most concerned

about when it comes to
implementing generative AI?
Despite the positive response to generative or operational costs, are unavoidable when
AI within the industry, there are barriers implementing new technology. However,
to overcome if it is to be implemented plug-and-play solutions such as Sprout.ai
successfully. Staff training was highlighted can reduce the time it takes to process a
as the top barrier (47%) to implementing claim and increase operational efficiency
generative AI in their organisations. Many without high IT transformation expenses.
of the use cases for the technology will
directly assist employees. Ensuring they Unsurprisingly, concerns about AI replacing
are comfortable with the tools, and know jobs, as well as safety and ethics, are still
how to use them effectively, will make present, suggesting more needs to be
a considerable difference to the overall done to bridge the trust gap. A substantial
success of implementation. Insurers and element of that task is further educating
technology providers alike will need to the market about AI broadly and how it is
ensure they have people top-of-mind when used within insurance. At Sprout.ai, the
looking to unlock widespread adoption. It is technology allows for the automation of
worth noting that this was a higher concern repetitive tasks and binary decisions. The AI
for UK-based insurers (58%) vs those in the is a support mechanism, while a human still
US (38%). makes critical judgement calls.

Cost was cited as the biggest barrier for Lacking an understanding of the
US insurers (48%), but only 22% of all technology ranked as the lowest barrier
respondents were concerned about not in both the UK (13%) and the US (15%),
seeing a return on investment. This perhaps reinforcing the fact that generative AI’s
reflects a misunderstanding that high reach has expanded far beyond just those
expenses, whether through IT transformation with deep technical expertise.

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Generative AI in insurance: Trends, benefits, and challenges

The
future of
insurance
The value and commercial benefits
of generative AI are wide-ranging.
Implementing this technology is not merely
a siloed project for technical teams, but
offers opportunities for every division.
This is an exciting time for insurers old
and new to capitalise upon the hype,
positive sentiment and innovation-friendly
regulatory environment surrounding
generative AI.

In doing so, they will be able to create

efficiencies, improve people’s job
satisfaction, and create a differentiated
customer experience.

As our last report showed, more than a

fifth of consumers expect their claims to
be resolved within hours, while 62% of
claimants who reported a good customer
experience said they remained customers
of their existing insurance provider8. When
generative AI is used to produce huge gains
in time and cost efficiencies, customer
retention will improve in tandem with
customer experience.

The key to success is embracing the

technology while ensuring employees
receive suitable training. Those insurers
that manage to strike the right balance will
set new standards for customer experience,
unlock business growth, and remain
competitive globally.

8 Sprout.ai. (n 7).

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Generative AI in insurance: Trends, benefits, and challenges

Key takeaways
Generative AI has become a topic of
discussion at the highest levels of
insurance companies, with Boards
recognising its potential.

Both UK and US insurers acknowledge

the opportunities presented by
generative AI in terms of enhancing
productivity and achieving cost savings.

Insurers believe generative AI can have

the most impact on marketing and
claims.

Insurers need to invest in staff

training and education to build trust in
generative AI and bridge the skills gap.

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Generative AI in insurance: Trends, benefits, and challenges

About Sprout.ai
Sprout.ai is an award-winning technology solution for the insurance industry, with the vision
to enable insurers to deliver a differentiated claims experience to their customers.

It uses ground-breaking AI and data-led products to automate every step of the claims
journey. Extracting and enhancing relevant claims data, cross-checking this with policies and
providing a philosophy-driven adjudication recommendation to conclude a claim in near real-
time. Providing claims handlers with time to spend with customers, where human touch and
empathy can make a real difference.

Sprout.ai has raised $15 million to date from top-tier investors Octopus Ventures, Amadeus
Capital Partners, Playfair Capital and Techstars.

Methodology

Opinium, on behalf of Sprout.ai, surveyed 126 insurance professionals between 6th – 20th April
2023, across the UK and US, with over 100 employees about their attitudes towards generative
AI. Middle management or above made up 52% of respondents. They are either responsible for
procuring new technologies or have a significant influence over purchasing decisions.

The most intelligent claims

automation engine
Delivering fast, accurate decisions to better serve insurance customers.

Speak to an expert

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Photography used on the covers and page 9 courtesy of Unsplash.com