Written by 7:30 am AI, Discussions, Uncategorized

– AM Best Report Identifies Artificial Intelligence as Primary Cause of Job Losses in Sector

With artificial intelligence (AI) continuing to make an impact across the industry, by transforming…

According to AM Best, a credit ratings agency, artificial intelligence (AI) has the potential to enhance productivity and reduce human involvement in the insurance industry by transforming the underwriting process and improving efficiency and accuracy within the value chain.

While there is a noticeable increase in layoffs and hiring within the insurance sector, attributing AI as the primary driver of job losses may be premature at this stage, as per the company’s assessment.

AM Best anticipates that the recent industry layoffs are more likely to be categorized as continuous rather than structural changes. Sridhar Manyem, the senior director of market research and analysis at AM Best, highlights that personal lines sectors, such as auto and homeowners’ carriers, are particularly impacted by current cutbacks due to factors like damage cost inflation, insurance capacity and pricing dynamics, and escalating climate risks affecting companies’ loss ratios and underwriting profitability.

As AI capabilities expand and insurers grow more accustomed to leveraging these technologies, especially in streamlining internal processes either internally or through outsourcing, the potential for cost reduction, enhanced flexibility in coverage, and overall savings for both customers and insurers becomes more apparent.

The evolution of large language models is expected to revolutionize various aspects of the insurance value network, including customer support, coverage technology, claims processing, and tasks involving document and image analysis.

Edin Imsirovic, the chairman of AM Best, emphasizes that automation driven by AI will impact not only sector employment levels but also a broader spectrum of tasks as insurers increasingly integrate AI into their operational workflows.

AM Best underscores the significance of understanding how AI systems can empower insurers in the future, particularly in leveraging data-driven insights to gain a deeper understanding of clients compared to traditional underwriting methods. By analyzing extensive datasets encompassing user demographics and preferences, AI facilitates trend identification in risk data and the customization of solutions for individual customers.

Furthermore, AI holds the promise of offering real-time risk assessments, aiding in swift decision-making, and enabling businesses to adapt promptly to market fluctuations by aligning pricing strategies with primary risks.

The application of predictive analytics supported by AI allows insurers to tailor policies to meet each client’s unique requirements, providing real-time risk assessments for on-demand estimates.

However, AM Best warns that the impact of ongoing AI disruptions remains uncertain, given its objective of simulating human intelligence. Moreover, concerns regarding data privacy and security, particularly in sensitive industries like healthcare, pose significant challenges with the adoption of advanced AI technologies, such as conceptual AI, raising ethical considerations and data security issues.

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Last modified: February 15, 2024
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