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The Independent Insurance Agent’s Introduction to AI

What is artificial intelligence?  

According to IBM, artificial intelligence is “technology that enables computers and machines to simulate human learning, comprehension, problem solving, decision making, creativity and autonomy.”  

AI has been around in different forms since the 1950’s, but the launch of ChatGPT in late 2022 brought generative AI to the forefront. Generative AI can create original content such as text, images, video, audio and more in response to prompts from users. Generative AI tools like ChatGPT are built on Large Language Models (LLMs) that are trained on a huge volume of data to enable them to understand and generate natural language – that is, the kind of language humans use to interact, as opposed to computer programing languages.  

Applications of artificial intelligence in insurance. What are the biggest opportunities of AI for insurance agents? 

In the insurance industry, artificial intelligence tools are already being used to help with underwriting, claims, customer service and more.  

Since AI can quickly process high volumes of data, it can aid in human decision-making, helping insurers offer more personalized coverage and pricing, process claims faster and identify fraud.  

Insurance agencies are still early on using AI, but use cases for AI tools in agencies include: 

• Generative AI tools to help quickly develop marketing content and personalized customer communications.
• AI chatbots to provide 24/7 customer service.
• AI tools that can scan and summarize insurance forms and policies to help with quoting, processing renewals and claims. Many of the tools can also extract information from documents and use it to auto populate forms to save time on data entry.
• AI tools that can record, transcribe and summarize meetings and phone calls.
• AI tools in agency management systems that use agency data to show opportunities for cross-selling and rounding out accounts, predict customer churn, personalize customer experiences and more.

These kinds of AI tools have the potential to save agents time on routine administrative and service tasks and drive efficiencies in agency operations. 

Source: Liberty Mutual 2024 Agent-Customer Connection Study

How will artificial intelligence impact insurance agencies? Will AI replace insurance agents?  

The full impact of AI in insurance agencies remains to be seen, since agencies are still early on in adopting AI tools.  

AI will not replace human agents, but AI tools have the potential to save agents time and make agencies more efficient by streamlining routine administrative tasks.  

Insurance is largely a relationships business. Insurance customers value the expertise of insurance agents, but modern consumers also value convenience and quick responses. AI-backed technologies can help agents meet customer expectations while focusing more of their time on human-focused tasks such as building relationships, working in the community, and interacting with customers and agency team members.  

Can insurance agents trust AI?  

AI technology is rapidly improving, but AI tools do get things wrong. Agencies should always have a human check the output of AI to make sure it’s accurate.  

The quality of results from AI depends on how the tools were built and the data the tool is given. Bad or limited data can lead to bad results. Furthermore, AI does not have a sense of right or wrong, and AI tools are often unaware of their own limitations. For example, generative AI tools have been known to “hallucinate,” returning false, made-up, or misleading information in response to prompts.  

Free AI tools such as the free version of ChatGPT may use user input to train future models, and may be susceptible to data breaches. Therefore, agents should be sure to never enter confidential information or personal identifiable information into free AI tools.  

What do insurance agents need to consider before implementing AI?  

Artificial intelligence tools have the potential to drive efficiencies in agencies, but agency leaders should be strategic about implementing new tools in their businesses. 

Before implementing AI technology in their agency, agency leaders should be clear on the problems they are trying to solve with the tool and the features they need in an AI tool. They should set clear guidelines for AI use within the agency, building in policies to help protect sensitive data and steps to check the output from AI tools.  

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