Trends for 2024 in the insurance industry: GenAI and beyond

GenAI opens up great opportunities for insurance companies to generate value. Likewise, it is also becoming a key driver of their digital transformation. The rapidly evolving technology can be used to automate and speed up insurance processes and significantly improve the customer experience. From a financial perspective, insurers benefit from GenAI’s ability to more accurately assess risks.

The right time for companies to start their GenAI projects and launch GenAI-enabled applications is 2024. The underlying language models have reached a high level of maturity, and many use cases have already been successfully put to the test. Any delay could result in the insurer falling behind the competition. According to Gartner, more than 80 per cent of all companies will be using the key technology of GenAI by 2026.

Six key trends for 2024

The adesso insurance team has identified six core topics for 2024 where it sees the greatest potential for insurance companies, largely driven by innovation and projects involving GenAI.

• Trend/focus 1: data-driven insurance
• Trend/focus 2: customer-centric insurance
• Trend/focus 3: automation and transformation
• Trend/focus 4: new work and agile insurance
• Trend/focus 5: digital health and wealth
• Trend/focus 6: green insurance

Trend/focus 1: data-driven insurance

The data and analytics experts at adesso have identified more than 200 use cases for GenAI along the value chain of companies, ranging from product development to customer management. And many of them can be implemented in short development cycles. The companies that make core insurance systems are also gradually incorporating futuristic AI components into their software.

Let us give two examples of potential use cases. Firstly, generative AI can be used to increase the precision of risk assessments and more accurately price insurance policies by analysing large volumes of data in real time. Secondly, GenAI can speed up claims processing and fraud detection by automatically processing damage reports and recognising patterns. In addition, chatbots allow companies to provide fast, high-quality service when customers have questions.

However, it is vital that the company take a holistic approach that includes a data strategy, a central data platform and a consolidated data infrastructure in order to tap the full potential offered by GenAI and to develop new services in a sustainable way and integrate them deep down into core processes. For this to happen, its specialist departments need to work closely with the data scientists and IT professionals. If the aim is to obtain benefits quickly, the organisational transformation that is needed at insurance companies on the path to becoming a data-driven company should take place at the same time the first GenAI lighthouse projects are being carried out.

Trend/focus 2: customer-centric insurance

The customer interface and customer communication are two areas where lighthouse projects involving GenAI make a lot of sense. This is where the added value provided by big data and generative AI really come to the fore. Customer analytics can be used to better understand what customers need, optimise the customer journey, prevent churn and thus increase customer satisfaction, especially since customers are more willing to hand over their data if they receive benefits in return, such as great personalised offers or fast application checks and claims processing.

There is a growing awareness for the risks amongst policymakers due to changes on the socio-economic and environmental front in recent years. To go with that, the role of the insurance industry in society is increasingly in the spotlight. Insurers can take a holistic, customer-centric approach in response to these changes, one that involves offering products aligned to the needs of the customer at this point and time in his or her life. It is more important than ever that they are part of ecosystems (embedded insurance) and that they establish standardised interfaces and adopt the Open Data standard at their companies.

Trend/focus 3: automation and transformation

Many insurance processes can no longer be mapped in a company’s IT landscape, as they extend across many systems employed by different users in an ecosystem. Industry standards such as Open Insurance or BiPRO provide for interoperability in communication with brokers and customers.

One challenge for insurers is how to free up the data in order to supply the interfaces from the legacy systems. Transforming existing monolithic systems into service-oriented infrastructures can create the necessary flexibility, not least in order to be able to attract employees to the company in the future who can and want to continue developing these solutions.

SaaS solutions such as robotic process automation (RPA) make an important contribution to reducing IT costs and increasing efficiency within the insurer’s organisation. RPA technology opens up new possibilities for automating insurance processes, which in turn leads to an increase in productivity and customer satisfaction, when used in combination with AI and GenAI.

Trend/focus 4: new work and agile insurance

GenAI is changing the way people work together and is driving the agile transformation forward at insurance companies. Forrester coined the term ‘agile knowledge management’, defined as:

‘an adaptive practice that continuously and iteratively captures, shares and improves knowledge to keep pace with the changing needs of the business, with demonstrated results within a cultural structure where leadership, management, staff and technologies all work seamlessly toward a common goal of improved agility of decision-making and innovation’.

The aim here is to incorporate AI solutions into the digital workplace, ones that are based on large language models and support collaborative work that can be used, for example, to summarise long documents, automatically generate meeting minutes or provide insights gained from previously completed projects.

However, this change must be backed by targeted change management. This means alleviating employees’ concerns, developing a data mindset, acquiring the necessary skills as well as recruiting experts in AI and in data and analytics in order to set up IT projects in cross-disciplinary teams on the basis of agile frameworks.

Trend/focus 5: digital health and wealth

There are lots of changes taking place on the healthcare market. Since the start of the year, doctors’ offices are under obligation to issue an electronic prescription (E-Rezept) for drugs subject to reimbursement by the statutory health insurance providers. The electronic patient record (ePA) will also be available to everyone covered by these providers starting next year. These are just two examples of how digitalisation in the healthcare sector is paving the way for smart customer journeys.

This new technology and the associated provision of healthcare services have a major impact on medical care. Private and statutory health insurance providers need to position themselves as partners, address policyholders directly and present customised offers so that policyholders can use the new services intuitively and when they need them. On the flip side, policyholders are looking to become more actively involved in their medical care and are demanding the digital solutions needed to make this possible.

There is great potential for each insurance company based on the approach they take with regards to the legal requirements, new digital health services and personalised customer journeys. Because of each company’s unique position in the industry, platform-based services in the various forms they take will change the healthcare landscape over the long term and improve the provision of healthcare.

Trend/focus 6: green insurance

The amount of damage caused by extreme weather events like the one we witnessed at the beginning of the year is growing as global temperatures rise. The climate targets set out in the Paris Agreement must be achieved, because otherwise the insurance industry will be unable to cover the associated costs. Insurance companies have a responsibility to promote environmentally sound practices through their products (such as building and car insurance), invest in sustainable projects and reduce their carbon footprint.

When it comes to the IT systems used in the insurance industry, sustainable software engineering and the migration of IT infrastructure to the cloud are potential ways to reduce energy consumption and emit less CO2. There are a whole host of cloud-based SaaS services that can also be used to manage the sustainability initiatives needed to meet the legal requirements.

Starting in 2024, the majority of insurance companies are required for the first time ever to submit ESG reports in accordance with the criteria laid out in the Corporate Sustainability Reporting Directive (CSRD). To meet this requirement, they need large amounts of data from different sources and data silos, which is another argument in favour of setting up a central data platform at their company. Cloud-based analytics and AI make it easier to prepare ESG assessments, make data-based decisions on sustainable investments, generate high-quality model-based forecasts and assess risks.

Conclusion

GenAI will have a major impact at insurance companies in 2024. It will be difficult to keep up with all the changes, especially when one considers the many opportunities opened up by GenAI and new solutions now being offered by insurtechs and software vendors such as Microsoft and Google.

adesso’s team of specialists can support insurance companies as they evaluate potential use cases from a technical, organisational and legal perspective, thanks to their extensive industry and IT expertise. They are also there to assist them as they implement them on an operational level in a way that quickly generates real benefits for the company and its customers. They never lose sight of the value chain as a whole or the desire to transform their business into a digital, data-driven company.

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