The Transformative Effect of AI on the Insurance Industry

Roi Amir, CEO and founder of Sprout.AI
Roi Amir, CEO and founder of Sprout.AI
Roi Amir, CEO of Sprout.ai, joined InsurTech Magazine to explore the transformative applications of AI, and the major disruptors reshaping the sector

Sprout.ai is a technology company specialising in applying artificial intelligence (AI) to the insurance industry. Their primary focus is on automating and accelerating the claims process. By leveraging AI, Sprout.ai helps insurance companies quickly and accurately handle claims, reducing processing time from days or weeks to just a few minutes.

This results in improved efficiency, lower costs, and better customer satisfaction for insurers. Additionally, Sprout.ai's technology aids in fraud detection and ensures more personalized and accurate claim assessments.

InsurTech magazine speaks to Roi Amir, Sprout.ai CEO, who shares insights on how AI is being used to revolutionise the insurance industry:

Q. AI is being used widely across many industries - what are its specific uses in insurtech? 

"AI is being used to transform an industry notorious for being clunky, outdated and slow. Sprout.ai’s research reveals that 59% of UK and US insurers are now using generative AI in their organisations, with 35% using it in claims and operations processes.

"By automating parts of the claims process using AI, insurers can improve the speed and accuracy with which claims are resolved. This includes extracting and enhancing relevant claims data, cross-checking with policies, and making a final recommendation. A process which has historically taken weeks or months can be concluded in near real-time, and with a higher accuracy rate (98%). 

"AI is also helping the industry to find new and smarter ways to reduce fraud, waste and abuse. Readily available and sophisticated AI technology bring with it a new wave of fraud that’s increasingly difficult to combat, such as generating fake evidence and documents in a claims case, as well as the ability to impersonate another person. But just as AI can be used to commit fraud, it can be used to mitigate it. The technology facilitates enhanced verification and profiling of fraudsters, along with data analysis that not only detects fraud but predicts the risk of it happening in future."

Key facts
  • According to KPMG's most recent Insurance CEO Outlook report, 52% of CEOs consider AI, including machine learning and generative AI, as the most important technology for achieving their business goals over the next three years​
  • KPMG's research indicates that 63% of insurance leaders believe that improving cybersecurity and privacy through AI will enhance customer loyalty.
  • According to a report by KPMG, over 72 percent of CEOs agree that AI regulation should parallel the rigor of climate commitment regulations

Q. How is AI being used to personalise the claims experience? 

"Personalisation will undoubtedly be a big area for innovation in insurance over the coming years, as consumer expectations evolve and insurance companies look to enhance customer-centric strategies."

For instance, there is an industry-wide pattern of customers increasingly looking for tailored policy options as they try to cope with the cost of living crisis.

"AI can help to deliver these," says Roi Amir. "Other consumer demands for personalisation have existed for far longer, such as the continued desire for human interaction and empathy during customers’ time of need.

"There is a misconception that a technology-driven approach might be a less personal one - the reality is the opposite. AI can help to personalise the customer experience and meet customers’ desires to be treated as an individual, not a number. Results from Sprout.ai’s own customers show a 30% increase in capacity for insurers using AI, giving claim handlers significantly more time to spend with customers and provide better, more empathetic care."

Q. How is AI impacting how investors engage with insurtechs?

"The true value of AI and its ability to revolutionise countless industries has now garnered widespread recognition, and insurance is no exception. Major insurers, once reluctant to change, are now partnering with exciting AI insurtechs changing the game. 

"Generali, for instance, made a first move into tech investing with Generali Ventures this year, and other investors have been quick to follow suit. 

"Dealroom values insurtech as a $7 trillion opportunity for investors. Investors are increasingly looking to back insurtechs that are enablers of incumbent insurers, especially those that provide AI infrastructure for insurers. Or they are looking for insurtechs that can cover new risks, or have a new distribution model. It’s important to differentiate between this profile of insurtech and those that carry more traditional risks, such as Lemonade and Hippo. Both technologies caught investor attention, but have plummeted in value since IPO or SPACs, as the market started valuing them through the lens of insurer valuation rather than that of a tech company."

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Q. What will be the impact of disruptors on legacy insurers? 

"The insurance industry is all about evolution, not tearing up the rule book, and insurers have really only just begun exploring the full potential of technology. It’s clear there’s an ongoing battle between legacy insurers and disruptors. But ultimately, the rising consumer demand for new technology and an improved claims experience places disruptors in a strong position to take on the traditional insurance model," he says.

"Legacy providers have been forced to innovate to maintain their competitive edge. AI is now top of the agenda for insurers at the board level and we’re seeing far less resistance towards the introduction of AI into the industry. Instead, the focus has shifted to how this tech can be leveraged in more impactful ways - like improving efficiency and productivity (61% of insurers see this as the greatest benefit of generative AI)."

Q. What challenges do disruptors present? 

"AI-led insurtechs are far more integrated in the insurance industry as a whole today. But getting both claims handlers and customers on side with AI will be the next challenge to overcome."

"Insurers and insurtechs will have to work together to address common misconceptions around AI that are leading to mistrust. Our research shows 43% of insurance customers cite lack of trust in AI decision-making as a reason to choose a non-AI insurer. For those concerned about ‘losing’ the  human element of the claims process, it’s important to show that AI is there to support - not replace - claim handlers in providing a better customer experience. This includes providing customers with clear information about where AI is used in the claims process, how it’s applied and why a conclusion has been met."

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