Insurer Zurich is testing how it can use ChatGPT artificial intelligence technology in areas such as claims and modelling, as it responds to the challenge posed by start-ups and bigger rivals, including China’s Ping An.
It is the latest example of long-established businesses, from law firm Allen & Overy to newspaper publisher Reach, experimenting with the technology.
Ericson Chan, who was poached in 2020 from Ping An to be Zurich’s chief information and digital officer, told the Financial Times that AI could create “a huge amount of efficiency” in jobs such as extracting information from long documents and writing code for statistical models.
“You’re not going to replace a developer, it’s a co-pilot. Similarly, for underwriting, for claims, it is not going to replace [people] but it is going to make it a lot more efficient.”
Zurich is investigating applications of the technology such as extracting data from claims descriptions and other documents. It is feeding in the most recent six years of claims data in an attempt to identify the specific cause of loss across a whole section of claims, with the aim of improving its underwriting.
Under Chan, the insurer has also created a new patent programme to protect its intellectual property, focusing on areas such as automated risk inspection and AI systems for processing bills.
Insurers’ use of AI has caused concern among public policy groups and regulators because of the implications for privacy and the potential for bias. US start-up Lemonade caused controversy in 2021 when it said its AI could identify fraud by picking up on “non-verbal cues” in videos from customers making claims. The insurer later clarified that it was simply describing commonly used facial recognition software that aims to spot the same person making multiple claims.
Chinese lenders including Ping An’s banking arm have gone further, using micro-expression technology in video communications with customers that they say can detect facial indications of whether borrowers are telling the truth. European and US firms have been more reluctant to use this technology.
Chan said Zurich was “very, very open” about its use of AI tools such as facial recognition and did not use micro-expression technology. But, in general, he warned about focusing only on the “pitfalls” of AI. “There are so many areas where there is so much benefit.”
Some insurance start-ups, such as Lemonade, have built their claims processes using AI, which can result in payouts being made on the spot. But despite these technology advances, big underwriting losses have weighed on their valuations.
Chan drew a distinction between newer “challenger” insurers such as Lemonade, which have suffered big drops in valuation, and other start-ups that do not carry risk but instead provide services and technology to the insurance sector. He said it was “not easy” for the challengers because they lack historic data and underwriting experience.
The emergence of tech-focused insurance start-ups was “healthy to take the industry forward”, he said, but the question for some was “how long can you survive to make it work?”
