How GenAI Is Changing the Life Insurance Landscape

June 2024

As we approach the midpoint of 2024, it is clear that generative artificial intelligence (GenAI) is here to stay within the insurance industry. While carriers already are very familiar with the transformative potential of digital solutions and AI, they now are evaluating how specific GenAI technologies can reshape core businesses functions. Leading-edge insurers are focusing on how to reinvent their processes to leverage the unique capabilities of GenAI. When they do this well, they will benefit from tangible outcomes across the insurance value chain.

In PwC’s 27th Annual Global CEO Survey, leaders from all industries, including insurance, shared their views on GenAI. Seventy percent believe GenAI will significantly change the way their company creates, delivers and captures value. Thirty-one percent say their company already has changed its technology strategy because of GenAI. In light of this evolution, this article addresses what 2024 may hold for insurers and outlines steps carriers are taking to build an AI-enabled future. Here are some trends to consider:

Business stakeholders, working with centralized AI “factories” and centers of excellence (CoEs), will be the engines for AI delivery. Carriers have begun 2024 with a much clearer intent than last year — budgeting thoughtfully and applying lessons learned from use cases. However, questions remain about the most effective ways to build an effective AI function. LIMRA and PwC anticipate large carriers will adopt a disciplined AI “factory” model that operates with established standards and at scale. Small and midsize insurers are likely to use CoEs, which bring together cross-functional stakeholders to align standards and foster partnership.

GenAI investment will expand from enabling and supporting existing functions to completely reimagining the insurance value chain. While many GenAI initiatives will focus on specific value chain functions — such as quoting automation and marketing communications — carriers also seek opportunities for GenAI to transform core functions and business processes. They are beginning to move beyond establishing table stakes toward pursuing ways to differentiate themselves from competitors and operate at a lower unit cost. These efforts include enabling touchless, same-day quoting; transforming internal knowledge management; and streamlining customer service.

GenAI will broaden the horizons of digital transformation. GenAI has the breadth of capabilities and scaling potential to significantly alter how carriers think about organizational change. LIMRA and PwC recommend that insurers evaluate their planned and ongoing digital transformations and ask whether AI capabilities could help accelerate these efforts or drive them more efficiently. For instance, some carriers have started to explore how to layer GenAI into their software development life cycle processes, while others are considering how GenAI can augment or completely recontextualize major activities, such as data migration.

In addition, technology vendors that serve insurers will begin to integrate GenAI into their offerings — which makes it critical to understand the inner workings of those applications. Carriers must insist on both traceability and audit capacity to ensure fair and lawful AI use. They also must address a key strategic question: When is it worth sharing data with a vendor to enhance platform efficiency, and when does it make more sense to protect and control data in-house?

New GenAI-driven products and services will provide carriers go-to-market opportunities through nontraditional channels, outside the traditional benefits sales cycle. GenAI’s increasing maturity and command promises to spur development of distinct, GenAI-driven insurance offerings that can be sold to or serviced for carriers, employers and third parties. For instance, in the group benefits space, these would include personalized recommendations for an ecosystem of insurance products, complementary services and benefits guides for employers and employees. In this space, carriers and third parties will compete to win the same opportunities — so there is likely to be a first mover advantage.

It is increasingly important to strengthen the foundations of sustainable, responsible AI use. The AI regulatory environment is evolving, and carriers are acting before regulations have been fully defined. Therefore, it is critical to regularly evaluate data management and monitoring practices to ensure their use of AI does not expose them to unintended regulatory and quality risks. LIMRA and PwC believe carriers will treat more conservative initial guidance as “a line in the sand” on how they can use both established AI and GenAI.

Moving Forward

There is a long road ahead, and these predictions just scratch the surface of where and how GenAI will impact insurers in 2024. Carriers are at various stages of their GenAI transformations, with some defining strategic visions and others zeroing in on key capabilities and solution designs. With a clearer understanding of GenAI’s potential, insurers are beginning to make corresponding investments in the following key areas:

• Creating delivery engines attuned to the demands of insurance
• Reimagining core functions and business processes
• Reinventing digital transformation
• Enhancing distribution and new business opportunities
• Strengthening the foundations of responsible AI use

Regardless of where your organization currently is on its GenAI journey, there is a great benefit to understanding how GenAI can help you, anticipating where you want and need to go, and choosing the right partners along the way.

Logan Richter, senior manager, consulting services, at PwC also contributed to this article.