Asian insurers' AI-readiness dictates their competitive advantage

Experts reveal why insurers that adapted Al earlier are now realising bigger extra earnings or cost reductions.

Insurers in Asia are ill-prepared to take a slice from the trillion-dollar market value that artificial intelligence offers for the global insurance industry, McKinsey & Company's analysts revealed.

"For most Asian insurance leaders, traditional organisational structures with multiple intermediaries and limited in-house tech and data resources make it difficult to visualise, let alone quantify, the potential benefits of investing more broadly in AI,' read a report by McKinsey's Hong Kong Senior Partner Violet Chung, Singapore Consultant Pranav Jain, and Chennai Partner Karthi Purushothaman.

These legacy structures meant that insurers are missing out on the US$1.1t of annual value. Approximately US$400b of this could come from pricing, underwriting, and promotion technology upgrades. Another US$300b could come from AI-powered customer service and personalised offerings.

Al has been named by experts as amongst the biggest trends that will shape the insurance industry in the coming years. When applied in tandem with human resource, Al's ability to analyse data quickly and accurately will enable vast amounts of data to be leveraged in efficient and innovative ways. This is the main assertion of business management services company, Accenture, in its Insurance Industry 2023 Outlook.

"What generative AI finally presents for the industry is a very manageably actionable way to start balancing the efficiencies that they're looking to gain with the experiences that consumers are increasingly demanding in the commercial and in the personal space," Daria Sharman said in Accenture's "Insurance News Analysis" segment.

"So when we think about particularly, I talk about underwriting and the challenges of underwriting - and what generative AI finally does is, it gives underwriters and the actuaries of the world both a strategic and a tactical asset," added the senior manager for insurance at digital agency, Accenture Song.