The insurance industry is undergoing transformative shifts as advancements in technology and artificial intelligence (AI) redefine how organisations manage risk and interact with their stakeholders. EY Canada and Microsoft have collaborated to address these changes, exploring how AI can create a new era of opportunities within the sector.
A rapidly evolving environment
The insurance landscape is being reshaped by several global forces, including climate change, cyber threats, economic uncertainty, and shifts in customer preferences. Each of these factors presents both challenges and opportunities:
- Climate change: Insurers are adapting to the increasing unpredictability of weather patterns and natural disasters. These events demand advanced modelling and predictive tools to better prepare for and mitigate risks.
- Cybersecurity: The proliferation of cyberattacks—600 million daily—has made cyber risk a priority for insurers, requiring sophisticated detection and response capabilities.
- Digital acceleration: The pandemic has driven a widespread embrace of digital experiences, altering customer expectations across demographics. Even traditionally tech-resistant segments, such as older adults, now prefer seamless online interactions.
The AI opportunity in insurance
AI is no longer a future aspiration but a present reality reshaping the insurance industry. Generative AI, in particular, has demonstrated its potential to revolutionise operations, enhance customer experiences, and create new business models.
AI enables insurers to transition from traditional reactive models of “repair and replace” to proactive approaches of “predict and prevent”. This shift not only improves efficiency but also enriches customer engagement and reduces costs.
Examples of AI in action include:
- Hyper-personalisation: Leveraging real-time data to tailor recommendations, improve underwriting accuracy, and optimise policy offerings.
- Claims management: Automating processes to achieve higher accuracy and reduce cycle times, enabling faster payouts and improved customer satisfaction.
- Customer interaction: AI-driven assistants providing instant, accurate responses to policy inquiries and supporting 24/7 self-service options.
Industry Momentum
Collaborative efforts between EY Canada and Microsoft underscore the momentum AI has gained in the insurance sector. Examples of transformative projects include:
- AI-Assisted claims processing: A major life insurer in Canada achieved 90% straight-through processing for group claims, significantly reducing manual workloads and improving turnaround times.
- Underwriting enhancements: An Asian division of a global insurer reduced underwriting cycle times by 40% with an AI-powered document analysis assistant.
- Customer-facing AI tools: Insurers deploying generative AI tools for customer interactions have reported increased customer satisfaction and operational efficiency.
Key considerations for AI transformation
Adopting AI requires careful planning and execution to ensure successful outcomes. Key considerations include:
- Governance: Establishing robust frameworks to manage risks and ethical implications of AI applications.
- Human adoption: Aligning AI deployments with employee needs and ensuring adequate training and support.
- Technical integration: Ensuring seamless integration of AI tools with existing systems and workflows.
Journey to the new normal
As AI continues to evolve, it offers an unprecedented opportunity to transform the insurance industry. By combining technological innovation with a deep understanding of customer needs, companies can create resilient, purpose-driven ecosystems.
EY Canada and Microsoft’s collaborative initiatives demonstrate the power of partnerships in tackling complex challenges and driving the industry forward. From enabling real-time weather insights to improving medical research capabilities, these projects illustrate how AI can contribute to a sustainable and customer-centric future.
By embracing AI responsibly and strategically, the insurance industry can unlock new opportunities and set the foundation for a “new normal” that benefits businesses, customers, and the wider community alike.
