Pegasystems: How AI Revolutionises the Insurance Industry
The insurance industry is undergoing a significant transformation, driven by rapidly evolving customer expectations and technological advancements.
While overall customer satisfaction within the sector has declined this year, according to the latest UKCSI report, standout performers like Nationwide and Co-op have demonstrated it is possible to lead the way in this area.
A key driver of their success is the strategic use of personalisation, powered by advanced technologies such as artificial intelligence (AI) and Generative AI (Gen AI).
However, the journey towards true hyper-personalisation and seamless customer experiences across channels is still in its initial stages, presenting both challenges and opportunities for insurers.
Manoj Pant, Senior Director of Strategy and Solutions and Insurance Lead at Pegasystems, a company that develops software for customer relationship management and digital process automation, shares his insights on how AI is revolutionising the insurance industry.
In today's market, where insurtechs set the standard for customer experience, traditional insurers can no longer afford to rely on outdated, segment-based strategies. Many insurance companies still target broad customer segments based on general factors like postcode, car model or demographics for auto insurance, rather than focusing on individual needs and behaviours.
Manoj explains: “This approach, while practical in some respects, falls short of delivering the tailored experiences that today's consumers expect.”
He further notes that sectors including life and health insurance have yet to fully capitalise on the potential of hyper-personalisation, instead remaining focused on broad demographics and financial standings. This represents a significant missed opportunity to build stronger, more loyal customer relationships.
Consumers are increasingly looking for services that reflect their personal preferences and lifestyle and personalisation offers several distinct advantages.
Firstly, it enhances the customer experience by making customers feel understood and valued, thereby increasing their satisfaction and loyalty.
Manoj reveals: “Additionally, services tailored to individual tastes and needs tend to lead to higher engagement levels, resulting in higher conversion rates and increased customer lifetime values.”
He continues: “Personalisation also improves customer retention by building a deeper emotional connection, making it less likely for consumers to switch to competitors.”
Furthermore, by leveraging data to accurately understand and predict customer needs, insurers can deliver solutions more efficiently and quickly.
This focus on personalisation not only meets customer demands but also serves as a strategic differentiator in the competitive insurance market.
To effectively address rising customer expectations within the insurance sector, embracing advanced technologies such as AI and GenAI is crucial. AI has the ability to quickly analyse large volumes of data, recognise patterns, and accurately anticipate customer needs.
Manoj says: “This allows insurers to offer not just generalised products but those that cater precisely to individual customer needs. By analysing past interactions, purchase history, and even social media behaviour, AI can help tailor recommendations and solutions custom-fitted to each person's unique circumstances and future requirements.”
He adds: “This kind of personalisation not only boosts customer engagement by providing relevance but also enhances overall satisfaction by making services appear more thoughtful and attentive.”
The role of AI in transforming customer service
The integration of GenAI into the personalisation strategy marks a significant leap forward. GenAI takes personalisation a step further by generating dynamic content and interactions based on ongoing customer data.
This can include everything from bespoke insurance plans to real-time advice during crises, adapting instantly to the data as it changes.
Manoj explains: “For example, following an automobile accident, a GenAI system could automatically initiate claims processes, guide the customer through necessary steps based on their specific policy details, and even provide tailored tips on avoiding future incidents.”
He continues: “These real-time, context-aware services render the customer experience more fluid and engaging.
“The adoption of such technologies ensures that insurers can remain at the cutting edge of customer service, offering unmatched personal experiences that are both satisfying and engaging.”
Balancing innovation with financial prudence
While it's essential to invest in advanced technologies to help meet customer expectations, insurers must also ensure that their bottom line is protected. This involves making smart decisions about where and how to deploy resources.
Manoj advises: “For instance, while it might be tempting to adopt low-cost channels like call deflection during challenging economic times, it's important to use these strategies only when they make sense for the customer experience. The goal should always be to achieve the best possible outcomes for both the customer and the business.”
From a technical perspective, adopting an agile development approach can help insurers remain responsive to evolving customer needs.
This method allows for continuous, iterative development, enabling teams to quickly incorporate feedback and make real-time adjustments to their service offerings.
Manoj explains: “This not only helps in enhancing customer satisfaction but also ensures that insurers remain competitive in a rapidly evolving market.”
The future of AI in insurance
The insurance industry stands at a pivotal moment. By leveraging advanced technologies like AI and GenAI, insurers can move beyond segment-based strategies to offer truly personalised experiences.
At the same time, a focus on seamless cross-channel integration will help customers receive consistent, high-quality personalised service across all touchpoints.
Manoj concludes: “In doing so, insurers can not only boost customer satisfaction but also deliver profitable growth, positioning themselves for long-term success in an increasingly competitive landscape.”
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