AI and its impact on insurance services

Digitalization has revolutionized multiple sectors, and insurance is no exception. Artificial intelligence (AI) has proven to be a key factor in process optimization, improved efficiency, automation of mechanical tasks, and, in short, the user experience. However, this undeniable technological progress also presents its challenges, especially in terms of governance, cybersecurity, and data protection.

According to the latest EIOPA report, the implementation of AI-based solutions has had a considerable impact on various areas of the insurance industry. Although the advantages are already known, the report highlights the importance of supervision and regulation to mitigate potential risks associated with decision-making based on an algorithm, especially considering the use of sensitive data.

The use of AI in insurance has allowed progress in different areas, such as claims optimization, pricing, and underwriting risks. Insurance companies have managed to improve the speed of claims resolution, personalize prices based on more precise risk patterns, and streamline the management of contracts and policies.

One of the greatest benefits of AI in the insurance industry is process automation, which enables, among other improvements, optimizing customer experience and resource management.

Chatbots and virtual assistants have significantly improved customer service by offering immediate responses and personalized solutions, reducing the workload of agents in favor of actions with greater added value for them and users, and increasing the satisfaction of policyholders. Likewise, AI has facilitated fraud detection by analyzing behavior patterns and detecting real-time irregularities.

The integration of predictive models has allowed insurers to anticipate future claims and offer personalized recommendations to customers, promoting risk prevention and policy optimization. Another important step forward is the application of AI on the Internet of Things (IoT), where connected sensors and devices collect data in real time to adjust premiums depending on the behavior of the insured party or directly to monitor certain areas of their life and act accordingly, as is the case in the health field or in the elderly care.

An example of this is the project carried out between MAPFRE and Aerial Technologies, through which both companies developed an environmental technology solution based on AI that infers human movement through the distortion of Wi-Fi signals. This allows for efficient tracking of the movements and routines of elderly individuals in their homes, without invading their privacy, while ensuring their safety and well-being.

In addition, AI is transforming document management and consultation from different angles. For example, it facilitates error detection in policies, speeds up response times, and, of course, reduces errors caused by human factors.

In Spain, MAPFRE has implemented MIA GPT, a sales management assistance solution (intermediaries and call center) in customer service tasks. The tool makes it possible to streamline responses to queries about coverage or other product issues. Among the results of the project, it should be noted that more than 1,500 documents are already available for consultation and that more than 3,000 users have already used this service, with a satisfaction index of more than 80%.

As with any aspect of personal or professional life, unknown—or poorly understood—changes or additions come with risks. It could be something as common as arriving late to your new job if you’re unfamiliar with the route, or more complex issues with varying levels of complexity. In this sense, AI is not exempt and also presents risks or challenges that need to be minimized and tackled.

One of these is the possibility of inappropriate algorithmic decisions: what happens when the algorithm is wrong? This situation may result in errors in claims management or in an inequitable price allocation for certain customers.

Another aspect to highlight is data protection and cybersecurity. As the use of AI increases, the collection and processing of sensitive data has become a priority for insurers, who must guarantee compliance with privacy regulations and avoid security breaches that may compromise customer information.

Algorithmic bias is also a significant challenge. AI is fed by historical data and previous patterns, which can perpetuate inequalities and generate discriminatory decisions if appropriate mechanisms are not applied to correct biases in machine learning models.

At MAPFRE, for example, we work with a startup, Holistic AI, with which we have developed a project that covers all the countries in which we operate, aiming to ensure the responsible use of AI. The solution is a platform for the identification, evaluation, and mitigation of risks of the artificial intelligence models we develop and use.

We must also consider the regulatory framework on AI in insurance, which is constantly evolving. In this regard, insurance companies must be prepared to adapt to new regulations and ensure compliance with ethical principles in the use of AI. At MAPFRE, we are prepared thanks to our internal risk and practices guides and the constant public-private collaboration we foster.

The impact of AI on the insurance industry is undeniable. Process optimization, improved risk assessment accuracy, and task automation have generated a more efficient and dynamic sector. However, it is crucial that such a transformation is led by people and for people to succeed.

The transformation that the insurance industry is undergoing must strike a balance between innovation and user protection. To do so, it is very important to continue developing regulations and regulatory frameworks that make it possible to take advantage of the advantages of AI without neglecting the possible risks it entails.

Insurance companies, regulators and AI experts must work together to define clear standards in the use of these capabilities, ensuring responsible development that benefits both companies and consumers. Trust and transparency in the use of AI will be essential for this revolution to be sustainable in the long term.

In this regard, digital education must be promoted among customers so that they understand how AI influences their insurance policies and decisions. It must also educate and train employees in humanist, ethical, and responsible use, both to avoid leaving anyone behind and to ensure that their implementation and use is appropriate worldwide.

AI represents a great opportunity and we need to be ready to make the most of it correctly.

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