Nearly three-quarters (73%) of insurance CEOs say that generative artificial intelligence (AI) is the most important investment opportunity for the organization despite economic uncertainties, according to a 2023 KPMG survey of insurance agency CEOs. However, you may be wondering, “How will the use of AI affect my agency?” In this post we will address some of the concerns and benefits related to using AI in insurance.
A better question is, “What can’t AI do for your agency?” As the following information from Independent Agent magazine and BuiltIn.com shows, there are a wide range of applications for artificial intelligence in an agency setting.
Of course, with such powerful tools there is the potential for large problems as well. In the KPMG survey, “Eighty-five percent of CEOs agree that it (generative AI) is a ‘double-edged sword’ in that it may aid in the detection of cyber attacks – but also provide new attack strategies for adversaries.”
Numerous studies, including a recent DEF CON red teaming hacking conference, have shown that chatbots can produce unwanted and sometimes erroneous answers depending on how questions are posed to them. Often, these problems occur because chatbots are taught to be agreeable and go along with the questioner’s line of inquiry without sufficient pushback. In nefarious hands, however, a chatbot’s agreeableness can be used intentionally to create false information or hate speech. Users of AI chatbots in business must review the bots’ responses to make sure they are providing accurate information.
Last year, the National Association of Insurance Commissioners released a model bulletin on artificial intelligence used by insurers. It outlined compliance, AI program guidelines, and regulatory oversight issues and is a good source of guidance for agency owners looking to use AI in their businesses.
According to KPMG, for insurance CEOs the biggest advantages of using AI are “to increase profitability (21%), aid fraud detection and cyber-attack response (20%), and also boost innovation (14%).” The survey went on to indicate that 58% of insurance CEOs expect to see ROI within three to five years, and a further 27% expect to see ROI in less than three years.
With so many advantages to using AI with regard to potentially increasing ROI, many agency owners are implementing or ramping up AI tools. These adaptations to changing needs may require additional working capital, which is where Oak Street Funding® can be helpful. Traditional banks are accustomed to collateral-based lending, while Oak Street has extensive experience with lending based on future growth expectations. Oak Street Funding understands the nature of the income streams in the insurance industry and can design a loan package to fit.
It’s becoming clear that AI is no longer merely a desirable tool or a shiny new object but is becoming a permanent part of the insurance landscape. Investigating applications for AI in agency operations and doing due diligence to avoid AI pitfalls can reap big rewards for an agency owner in today’s competitive market.