The era of generative AI: Driving transformation in insurance

Insurance companies deliver critical products and services that underpin economies, give customers assurance as they pursue their dreams, and keep businesses and families running when disaster strikes—all while delivering value to their shareholders.

Every insurer is keenly attuned to addressing the challenges the industry has faced in recent years—economic uncertainty and industry-specific concerns around climate change and geopolitical upheaval, to name but a few. Another challenge is technology, which holds the promise of either competitive differentiation (winning) when done well, or the threat of market loss or disintermediation (losing) when done poorly. There’s no middle ground.

All this was true before 2023. Then, the world shifted. With the arrival of ChatGPT and generative AI, the power of AI became more accessible to everyone. For Microsoft, this will drive an evolution of our vision for intelligent insurance. For insurance companies—with their data-centric product focus, to their vast ecosystems of digital-savvy agents and customers—it is simply a red-hot opportunity.

Microsoft and generative AI: Creating new possibilities

We are seeing an unprecedented level of interest in AI technology that we’re seeing now around generative AI, which I generally define as a system for generating text, images, or code in response to user input or prompts, drawing on vast sets of data. Our customers are asking: What can it do for us now? What are the best use cases? How do we get started?

The first thing we tell them is that generative AI is close at hand. For companies that want to build their own generative AI solutions, Microsoft Azure OpenAI Service brings together advanced models from OpenAI, including ChatGPT and GPT-4, with the enterprise capabilities of Azure. Critically for insurers, all data uploaded—including training data and content—is isolated within your Azure subscription so it stays within the bounds of your organizations. By being fully integrated into Azure, insurers also get all the advantages of enterprise-grade security and role-based access included. And it’s only getting better, as we recently announced the availability of GPT-4 in a preview release. GPT-4 is OpenAI’s most advanced large language model, enabling you to drive insights with greater accuracy than previous large language models developed by OpenAI.

This is in addition to the fact that AI is already being integrated into the Microsoft Cloud and in the Microsoft products that customers already use and love. We recently announced Microsoft 365 Copilot, which integrates amazing new generative AI capabilities across the Microsoft productivity suite, and this is complemented by copilots for Bing Search, Microsoft Dynamics 365, Viva Sales, and GitHub.

That’s a ton of innovation—so much that it may seem overwhelming. Let me offer some insights into what we see as the most important capabilities for insurers and how those will play out in use cases.

Here are the top three generative AI capabilities that we expect will quickly take hold among insurance companies and deliver differentiating benefits:

Content creation and summarization. Generative AI will be widely used within organizations to generate things like proposals, reports, presentations, and summarizing internal meetings and customer conversations.
Semantic search. Using natural language and context, searching will become smarter and faster, and will be continuously trained as you interact with your customers.
Code generation. With copilot capabilities for generating sophisticated code, developers will spend less time writing lines of code and more time designing new statistical models and mathematical tools for actuarial challenges.

Generative AI use cases insurers will love

With these capabilities, we can enable some compelling scenarios. The following use cases can empower and drive productivity across the organization:

Empowered contact center agents. With the ability to transcribe, summarize, and get insights on every customer engagement, agents can instantly measure sentiment from the start to the end of a conversation. Contact center staff can get coaching in real time. And new intelligence can be fed into a contact center knowledge base to give agents better and faster responses to future questions. Insurers can benefit from aggregated insights for tracking key performance indicators for customer satisfaction, engagement, and Net Promoter Score impact, continuously improving the experience for customers.
Empowered underwriters. In complex lines of business—as in commercial, specialty, and reinsurance—underwriting involves the processing of large amounts of unstructured data. Generative AI, in conjunction with other AI capabilities like optical character recognition (OCR), can play the role of an “underwriting assistant” by extracting and organizing the various forms of data, summarizing the content, and then suggesting areas of opportunity for underwriters to consider based on appropriate logic. Documentation can then be generated to bind the policy. This should free underwriters from non-core tasks and administrative tasks that typically take up to 40 percent of their time.
Empowered claims managers. Generative AI will impact almost every step in the claims lifecycle. Customer service representatives can use it to summarize policy documents during the first notice of loss and more quickly respond to customer inquiries along the claims journey. Claim adjusters and handlers will use it to quickly ensure that high-priority claims are handled promptly and that lower-priority claims don’t cause delays or backlogs. Insurance recovery specialists will use it to help in the coding of subrogation and reinsurance claims to expedite the recovery of capital due from third parties or reinsurers.
Empowered insurance brokers and agents. Generative AI enables you to deploy powerful knowledge base systems. As customers seek to buy new insurance products or renew their existing coverage, product knowledge bases enabled through a chat-like experience could empower brokers to answer customer questions about coverage levels and other benefits.
Bigger and better virtual assistants. A new customer journey often begins online, where digital agents play a large role in helping them explore insurance. Generative AI reimagines the whole notion of a chatbot and enables new types of engagements. Customers and prospects will be able to ask all kinds of questions in natural language and quickly get contextualized answers. Employees and agency partners will also have better experiences by getting answers fast to the questions needed to do their jobs.

Responsible AI by design

Generative AI can sometimes generate inaccurate output, so for all use cases, human oversight and supervision are key. As next-generation AI innovation gains momentum, we are optimistic about what it can do for people, commerce, and society. Microsoft advancements in AI are grounded in our company mission to help every person and organization on the planet to achieve more. We’re committed to making the promise of AI real—and doing it responsibly. Our approach to AI is based on three principles: meaningful innovation, empowering people and organizations, and responsibility.

Accordingly, we’re dedicated to the responsible development of AI systems for the industry, ensuring they will function as intended and be used in ways that earn trust. We were one of the first major technology companies to call for thoughtful government regulation on facial recognition technology and are committed to creating responsible AI by design through our Responsible AI standard. Read “What is Microsoft’s Approach to AI?” for more information.

What’s next for intelligent insurance

Our mission is centered around empowering insurers, and we are thrilled to introduce them to our generative AI advancements through our Azure OpenAI Service and Microsoft 365 Copilot offerings. Moreover, we will collaborate with our industry partners to facilitate the integration of these powerful capabilities into their own solutions. I am eager to witness the innovative creations that our insurers and partners will develop with generative AI. Our collective efforts will allow us to use the most advanced AI models available to meet business objectives with responsibility, security, and the assurance that comes with the Microsoft Cloud.

Find out more about our vision for intelligent insurance and how the Microsoft Cloud and our global partner ecosystem can help you address evolving customer needs, hybrid workplace requirements, complex regulations, new competitors, solution integration, and the increased frequency and severity of claims.