$50 billion opportunity emerges for insurers worldwide from generative AI's potential to boost revenues and take out costs

AI technology offers insurance businesses large-scale financial potential from productivity gains, optimizing sales channels and digital advice, and delivering enhanced, personalized customer experience

BOSTON, April 1, 2024 /PRNewswire/ -- Insurance businesses worldwide have a $50 billion dollar financial opportunity from generative AI to harness the technology in ways that could boost their revenues by as much as 20% and cut their costs by up to 15%, research from Bain & Company released today finds.

Bain's report, It's for Real: Generative AI Takes Hold in Insurance Distribution, concludes that leveraging generative AI in insurance distribution has the potential to yield more than $50 billion in annual economic benefits for companies in the sector.

"For insurers, benefits due to generative AI will come through three routes," said Bhavi Mehta, global lead of AI in Financial Services at Bain. "This includes raising productivity, lifting sales through more effective agents and digital advice, and better risk identification and targeting that will help both customers, agents and the enterprise. At Bain, we remain committed to helping our clients not only within insurance ‒ but across industries ‒ identify and realize AI's full business potential."

Generative AI will transform insurance distribution in four ways

Early use of generative AI within insurance suggests the technology will transform distribution in four ways, including:

• Agent productivity: The technology will help agents to navigate and produce content faster. It will reduce low-value interactions and provide coaching for more effective interactions with customers.
• Customer self-service and sales support: An always-on virtual assistant will extend the availability of agents and help customers with product comparisons and digital purchases.
• Hyper-personalization at scale: Tailored conversations, content, and offers will more readily respond to individual customer needs.
• Business insights and decisions: Combining signals from unstructured data with structured data will yield new insights and aid in risk identification.

Managing the risks

Bain's analysis also pinpoints key risk areas emerging from insurers' developing use of generative AI including hallucination, data provenance, misinformation, toxicity, and intellectual property ownership.

"As with any nascent technology, there will be risks," said Sean O'Neill, leader of Bain's global Insurance practice. "To manage risks, insurers should adopt a responsible AI strategy that includes short-term priorities, as well as a long-term vision enabling companies to build valuable AI capabilities to redefine their business operations."

Critical steps for insurance business leaders

As generative AI continues to evolve, Bain urges insurance companies to take several critical steps to adapt to the fast-developing technology. These include aligning across business units on how AI can support business strategy, determining what to build internally and what to buy from vendors, ensuring that delivery teams are cross-functional, and designing an operating model that is adaptable.

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About Bain & Company

Bain & Company is a global consultancy that helps the world's most ambitious change makers define the future.

Across 65 cities in 40 countries, we work alongside our clients as one team with a shared ambition to achieve extraordinary results, outperform the competition, and redefine industries. We complement our tailored, integrated expertise with a vibrant ecosystem of digital innovators to deliver better, faster, and more enduring outcomes. Our 10-year commitment to invest more than $1 billion in pro bono services brings our talent, expertise, and insight to organizations tackling today's urgent challenges in education, racial equity, social justice, economic development, and the environment. We earned a platinum rating from EcoVadis, the leading platform for environmental, social, and ethical performance ratings for global supply chains, putting us in the top 1% of all companies. Since our founding in 1973, we have measured our success by the success of our clients, and we proudly maintain the highest level of client advocacy in the industry. 

SOURCE Bain & Company