GenAI: A New Era for Insurance Contract Management and Customer Service

By Graham Webber, BSG Senior Consultant

 

An interesting coincidence occurred in the writing of this article in that I found myself in the middle of an insurance claim. Fortunately, it was a minor one - just a windshield replacement. Since insurance customer service has been on my mind, and AI is always on my mind, I have been paying close attention to my experience throughout this process and carefully considering the ways AI and GenAI could make this experience more seamless and efficient.

Let us examine the role of GenAI in contract management and customer service, specifically for, but not limited to, the insurance industry and the associated risks and some strategies to mitigate them. Arguably, the most impactful part of the insurance life cycle when it comes to a customer’s satisfaction is their experience when claiming. In a previous article, we looked closely at the claims process and what it might look like when backed by a robust GenAI solution.

Contract management and customer service are crucial aspects of the insurance industry, impacting operational efficiency and customer satisfaction. Efficient contract management holds the potential to save money and increase customer satisfaction by safeguarding policyholders' interests and maintaining trust.

In November 2022 GenAI was virtually unknow to most companies. According to a survey by International Data Corporation, by September 2023, 71% of companies were using gen AI. Historically, the South African insurance market has been dominated by intermediaries. While we have seen a shift toward direct digital channels, GenAI's transformative power is set to significantly accelerate this transition, marking a new era in insurance.

 

CUSTOMER SERVICE - SUPERCHARGED

 

Enhancing Customer Service with GenAI

GenAI brings a host of direct benefits to customer service. For instance, chatbots and virtual assistants can handle routine inquiries, offering quick and personalised responses in natural language. This not only reduces wait times but also enhances the overall customer experience. With 24/7 availability, customers can inquire about policy details, claims status, or coverage options at their convenience. Results from an international survey found that 67% of insurers are already integrating generative AI or chatbots into their customer service process. But the benefits extend beyond this. Indirectly, GenAI can enhance customer service by streamlining internal processes, leading to faster turnaround times and cost savings that can be passed on to the customer.

 

Uncovering Hidden Opportunities for Improvement

Some not-so-obvious applications of GenAI will supercharge continuous improvement. GenAI can mine large sets of prior communications to discover common queries, problems, and difficulties. This allows the insurer to determine the most effective ways to communicate with different groups of people and the best negotiation strategies. This could then guide the continuous improvement of phrasing and explanations in future communications, contracts, and documentation.

 

Precision in Claims Assessment and Call Quality

For my claim, I had to fill in a generic form in which one of the fields asked me to describe the damage and how it happened. The assessor asked me if the windscreen needed to be repaired or replaced. I do not know the conditions for repair vs. replacement of a windshield, nor did they. But an AI could answer from the detail I submitted in the form, and it does. I described it to Microsoft Copilot, and it responded, “A 20 cm crack that extends to the edge of the windshield is unlikely to be repairable. In such cases, it’s recommended to replace the entire windshield for safety reasons. Consult a professional technician to assess the damage and provide specific guidance.” Another area that GenAI could have improved my experience was with the agent’s call quality. The line was relatively poor when my insurer called to assist with my claim. I had to ask the agent a few times to repeat their questions. An AI agent going through the transcript could identify that I was struggling to hear, and immediate action could be taken to improve the call quality.

 

CONTRACT MANAGEMENT 

 

Standardised Contracts and Personalisation

GenAI can streamline the creation of standardised contract templates by suggesting appropriate wording clauses, ensuring that policies, endorsements, and other contractual documents are consistent. This uniformity is crucial for reducing errors and maintaining compliance with regulatory standards. GenAI also plays a pivotal role in reviewing new and existing contracts to reflect current company policies and regulatory requirements. Furthermore, by leveraging customer data, GenAI can offer personalised insurance product recommendations that cater to individual risks, preferences, and life situations, thereby providing customers with tailored plans that enhance value and foster loyalty.

 

Proactive Strategies

In the future, we may see GenAI help empower the insurance sector to transition from a reactive ‘detect and repair’ approach to a proactive ‘predict and prevent’ strategy. The application of artificial intelligence in mitigating and preventing risks is paramount. For instance, GenAI can facilitate proactive engagement with customers during precarious situations. For instance, the predict and prevent example that immediately springs to mind is health insurers rewarding a healthy lifestyle; one could imagine an AI that create a dynamic and personalise health plan and then act as an accountability buddy to help you resist temptation while trying to kick a bad habit. Adopting such a model could herald a transformative business paradigm focused on loss prevention through holistic risk management rather than merely offering compensation post-loss. This evolution towards significant reduction in total losses, benefiting insurance firms and policyholders and contributing positively to broader economic health.

 

RISKS AND CONSIDERATIONS 

 

Compliance and Trust

As GenAI is quite a novel technology in the way it operates, the risks associated with it are also novel. Careful consideration and robust governance must be in place to mitigate these risks. The importance of data security in preserving customer trust and complying with regulations such as the Protection of Personal Information Act (POPIA) cannot be overstated. Ensuring compliance in the implementation of AI to be the second biggest concern among insurers, after seamless integration into business operations. As with any technology, GenAI is not infallible. Organisations must equip their employees to detect and prevent the acceptance of inadvertent misinformation.

 

Transparency and Decision-Making

The ‘black box’ nature of AI, which often conceals the reasoning behind its decisions, presents an additional challenge, particularly for the insurance industry where trust is paramount. Therefore, organisations must strive for transparency and comprehensibility in AI decision-making processes to maintain the trust of their customers. When I described my claim to Microsoft Copilot, I noted that one of the references was a spoof video on repairing a cracked windscreen with toothpaste and baking soda. So, while it gave me the correct answer, it was not far from returning something wrong. This highlights the importance of using AI to assist and empower the assessor, but the human in the loop should make the final decision.

 

AI Scrutiny

AI is also held to a higher standard and is scrutinised more than humans. Had I had the same conversation with an AI as with the assessor who assisted me, my sentiment towards the interaction would have been quite negative. I know I am personally much more patient in repeating myself to a friend than in my voice-activated devices.

 

THE GOAL? POSITIVE CHANGE 

 

The need for GenAI in business modernisation is paramount, yet it requires a profound understanding of your business. This is highlighted by the fact that while, as stated earlier, most companies are starting to use GenAI, Intel’s cnvrg.io found that only 10% of companies managed to launch any GenAI projects into production last year.

BSG has extensive experience collaborating with insurers, aligning data and AI strategies with business objectives, and transforming data into a competitive edge. Our comprehensive approach to modernisation integrates people, processes, and technology, enhancing operational efficiency and revolutionising workflows through advanced AI and automation. Recognising GenAI's enduring presence, we have made substantial investments to become experts not only in the technology but also in its business impact.

 

YOUR BUSINESS NEEDS MORE THAN JUST GENERATIVE AI 

It needs enhanced efficiency, productivity, and accuracy to boost profitability.

Get in touch with us to discuss how we support insurance organisations to turn what was once science fiction into reality. 

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