The global insurance industry is undergoing a profound transformation powered by a cutting-edge technology: generative AI. Gone are the days of experimental tests; Fractal Analytics, a leader in the field, reveals how this AI revolution is scaling up, reshaping internal operations, and paving the way for a brighter future.
“Generative AI is no longer the future, it’s the present,” declares Amarava Roy, Principal Consultant at Fractal. This shift isn’t just hype; it’s driven by the immense potential AI holds to streamline processes and unlock deeper insights. Insurance companies, traditionally seen as tech adoption laggards given the risk management nature of the industry and the regulatory side of it, are embracing this change with open arms.
“At the heart of this revolution lies internal efficiency,” Rashid Khan, Engagement Manager at Fractal, explains how document-heavy workflows are being streamlined with AI-powered knowledge management. Underwriters get instant access to critical guidelines, and claims adjusters leverage past case insights, empowering them to make faster, more informed decisions.
But the magic extends beyond simple automation. Code generation AI, capable of boosting programmer productivity by 80%, thus empowering coding professionals to advance their skills in an industry where regulatory changes demand frequent updates to pricing models for example. Generative AI aids in code maintenance and updates, ensuring compliance and accuracy. And self-serve analytics solutions built on generative AI are putting powerful insights at the fingertips of everyone, not just data scientists.
Khan says that one of the standout areas where generative AI is making a significant impact is in streamlining internal operations. “Traditionally document-heavy and reliant on manual processes, the insurance industry is leveraging generative AI to enhance productivity and efficiency,” he added.
In the realm of knowledge management, underwriters now have rapid access to guidelines and policy documents, facilitating quicker decision-making during the critical underwriting process. Similarly, claims adjusters benefit from knowledge bases built on adjuster notes, empowering less experienced professionals by providing insights from past cases.
“Insurance industry is very excited about Generative AI”
The roles of underwriters and claims adjusters is constantly and rapidly evolving with generative AI. Roy and Khan highlighted the importance of setting clear expectations and reassuring users that generative AI is meant to augment human capabilities, not replace them. Addressing fears and curiosities among employees, especially in a technology-enabled ecosystem, is crucial for successful adoption.
One of the things that Khan pointed out was that Generation Z is increasingly not looking for jobs as underwriters and in the insurance industry as a whole. “Generative AI can attract talent from Generation Z, offering an edge to early adopters. However, it is essential to clarify that while it enhances efficiency, it does not replace the core functions and expertise of underwriters and claims adjusters,” Khan added.
“Generative AI is not here to replace humans, it’s here to empower them,” emphasises Khan. Fractal’s “Crux,” an in-house AI copilot, exemplifies this philosophy. Crux doesn’t just answer questions; it explains the reasoning behind its answers, fostering understanding and collaboration between humans and AI. Positioned as a bridge between generative AI and business intelligence, Crux provides a conversational interface for users to interact with data. This tool not only provides answers but also explains the reasoning behind them, enhancing the user’s understanding of the insights generated.
Yet, with such power comes responsibility! Roy acknowledges the ethical concerns surrounding “hallucination,” where AI models generate inaccurate information. Fractal tackles this head-on with RAG, an approach that verifies information against trusted sources, ensuring data integrity and user trust. This focus on responsible AI isn’t just lip service. Fractal embraces a robust multi-cloud approach, ensuring flexibility and data privacy. They champion open-source language models, allowing for customization and control over algorithms. And their commitment to governance guarantees ethical implementation, mitigating risks, and building trust.
This journey doesn’t end with internal optimisations. As Roy points out, “the focus is on driving customer value ethically and securely.” From personalised risk assessments to faster claims processing, the future of insurance promises a seamless customer experience powered by responsible AI.
All the tech
Fractal has a cloud agnostic approach and does not depend on any specific cloud provider for the same. Khan said that when ChatGPT was released, it was obvious for them to rely on Microsoft Azure for OpenAI services. But with the increasing number of models and companies, they have experimented with AWS and Google Cloud as well.
Furthermore, Khan said organisations are adopting a multi-cloud strategy, choosing cloud providers based on existing infrastructure, preferences, and strategic partnerships. The use of open-source language models adds flexibility and transparency to Generative AI implementations, allowing for customization and control over algorithms.
He also focused on the fact that open-source language models have been crucial for ensuring that their goals in the insurance industry work perfectly for ensuring data privacy and flexibility with the cloud providers.
Data privacy and security are also paramount concerns, along with potential biases in the data used for training generative AI models. Adherence to ethical standards is crucial for building trust with customers and upholding the industry’s reputation.
To solve the hallucination problem, Fractal has been implementing RAG for fetching information from specific sources, instead of relying on it. “We have been using RAG and it has been working pretty well for us,” added Khan. For this, Khan said that there is no specific solution provider they focus on and decide the provider as per specific use cases. The company is also working to figure out how hallucinations can be reduced even further by employing agents in their frameworks.
Looking Ahead: The Future of Generative AI in Insurance
As the insurance industry continues its journey with Generative AI, the focus remains on security, ethics, and internal productivity. The technology is not just a novel addition but a transformative force shaping day-to-day operations. The transition from experimentation to scaling indicates a future where AI seamlessly integrates into the insurance workflows, contributing to enhanced efficiency, informed decision-making, and a more empowered workforce.
“It is important to emphasise that across industries, organisations are experimenting with generative AI, each striving to drive customer value ethically and securely. The focus on responsible AI, keeping humans at the centre, and setting clear expectations emerged as critical considerations for successful adoption,” Roy added.
This is not just a tech revolution; it’s a cultural shift. Fractal’s roadmap includes building a robust “Generative AI Center of Excellence” to fuel experimentation and rapid scaling. By empowering Insurance workforces with human-centric AI solutions, they’re paving the way for a future where insurance thrives on efficiency, informed decisions, and a deeply human touch.
Governance is also identified as a crucial layer to ensure responsible and ethical AI implementation. The need for a comprehensive governance structure involving technical, legal, and leadership perspectives was emphasised to address technical, regulatory, reputational, and revenue risks.
In conclusion, Fractal provides a comprehensive view of the transformative journey of Generative AI in the insurance sector. From internal empowerment and ethical considerations to technology choices and the roadmap for adoption, the insights shared highlight the industry’s commitment to leveraging AI responsibly.
As generative AI continues to evolve, the insurance sector stands on the cusp of a technological revolution that promises enhanced efficiency, informed decision-making, and a workforce empowered by human-centric AI solutions.
