AS RAPIDLY growing companies such as Spotify and Instagram, along with the adoption of cloud computing, marked a new dawn for technology in the 2010s, venture capitalist Marc Andreessen declared that “software is eating the world”.

Now, we stand before another frontier where AI is eating software. Generative artificial intelligence (AI) will further transform the world as we know it.

Using large language models (LLMs) that harvest vast amounts of data to capture the “wisdom of the crowd”, generative AI is opening doors to new opportunities for insurers. For example, it can help identify protection gaps for individuals. It also improves risk assessment of individuals and companies.

Generative AI could help to predict and prevent serious illness, delivering the ultimate promise of the industry – risk prevention. Finally, it can boost productivity and enable insurers to reimagine customer experience.

Mind the protection gap

Many people are still underinsured and underprotected today. A 2022 study by the Life Insurance Association (LIA) found that Singapore has a S$373 billion mortality protection gap and S$579 billion critical illness protection gap. This equates to about S$170,000 and S$265,000 per economically active adult, respectively.

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Protection gaps deprive individuals of the medical treatment that everyone deserves. But AI makes it possible for insurers to fill it through personalised coverage that matches exactly what you need.

Generative AI can power customised plans for one’s insurance needs by analysing information on your habits, needs and profile. By reviewing the risks and needs, it can easily recommend the types and amount of insurance coverage, deductible and premiums that one needs.

Insurers with such capabilities could even take it up a notch to offer timely, dynamic protection based on real-time activities as protection gaps vary accordingly. Perhaps you have taken up a high-risk sport or are going bungee jumping. By integrating generative AI with your digital ecosystem, you could receive a prompt with recommended insurance cover which takes into consideration the risk level of the activity.

The technology can also help financial representatives better structure investments and protection portfolios; and identify and navigate moments when customers are anxious about markets volatility. It reassures customers and helps them to avoid emotionally driven financial decisions to improve their long-term protection.

Fill the information gap

There is more. Generative AI can fill the information gap in the claims process and make the customer experience more seamless.

Currently, when incidents occur, policyholders must onerously check their claims eligibility, consult their agents, or ring a company hotline to clarify what their coverage entails. Having to do so while recovering prolongs the claims process.

With generative AI, one can simply ask the insurer’s AI assistant – or take a picture of medical invoices – to it summarised and get immediate clarity on coverage across products. The AI assistant can even prepare the submission.

In the same study by LIA, 50 per cent of respondents indicated that insurance products and illustrations should be simplified. AI can advance financial inclusion by boosting financial literacy and bridging language barriers. For example, it can simplify information, provide customer-specific explanation, and even translate the information into the customer’s preferred language instantly.

Generative AI has already made leaps in LLMs for the region, with humanised voice AI talkbots engaging customers in their native languages such as Bahasa Indonesia. Real-time translation and transcription by AI agents support customers in multiple languages, and empower communities to better understand their insurance policies and needs.

Bridge the skills gap

With AI, the next leg of the life insurance sector is tremendously promising. It is unlikely that AI will replace multi-faceted jobs in their entirety. Instead, it can create value by improving efficiency and elevating expertise.

Based on International Data Corporation (IDC) numbers, data workers spend 82 per cent of their time searching, preparing and governing data. These are effort-intensive, mundane tasks that can be automated using LLMs. With generative AI, data analysts can see their usual data cycle at work – from data cleaning and standardisation to statistical analysis – optimised from hours to a mere second or less, allowing employees more time to focus on complex and high impact problems. It is designed to be easy to use, even for people without any technical knowledge. It democratises the process of insights generation and shortens the time between exploration and application.

Generative AI can play a big role in all facets of the business, from customer service and risk to underwriting and claims. Greater efficiency and automation can help insurers lower operating costs and free up resources to provide coverage to more customer segments.

Pre-emptive purpose, promising prospects

The holy grail for AI in insurance may be in pre-empting incidents, particularly health risks. Access to troves of data is key; and the right partnerships between insurers, governments and the healthcare sector could unlock its full predictive potential.

Based on a patient’s medical history, generative AI could intervene to identify links to more severe underlying conditions. This is made possible through surfacing complex data correlations with specialised LLMs who are trained on the latest medical research. The result could be a quicker diagnosis, preventing serious health episodes down the road and supporting patients to actively manage their health conditions.

Data is the new oil, and AI is the engine that turns data into a strategic advantage.

Even as the prospects are exciting, like any new technology, we have to approach generative AI with measured optimism. It is a must to incorporate robust internal AI governance frameworks.

Platforms such as the Veritas Initiative, a Singapore government initiative for responsible AI, will further encourage partnerships within the industry to eliminate ethical concerns and safeguard customer interest.

There is still some way to go before we resolve teething issues with generative AI, but once we do so, it will usher in a new era of life insurance.

The writer is chief information technology officer at Prudential Singapore