Is the Gen AI Revolution Coming in Insurance? | Swiss Re | FF Virtual Arena #335

Digitisation of insurance has been slow to take hold. But progress is being made.

Nowhere is this more true than in Life and Health insurance.

In this latest edition of the FF Virtual Arena, we spoke to Head of Life and Health Solutions at Swiss Re, Carl Christensen, to find out some of the advancements taking place and where the industry can still go.

Of course Generative AI gets a mention. It’s interesting to see how this could really benefit insurers and the consumer.

Read on to find out more.

Technology Growth in Insurance

Christensen has had a strong focus in recent years on aligning technology with business needs. For the past three years, he has been responsible for life and health solutions at the major Reinsurer, driving the development of technology assets that could help clients improve risk assessment and automation. As with any such technology the goal is to facilitate digital transformation and improve customer engagement while simplifying underwriting and claims processes. Christensen goes on to highlight Swiss Re’s strategy of focusing on areas they understand really well, particularly underwriting and claims, and avoiding areas outside of their expertise.

The insurance industry has certainly undergone major changes over recent decades, and Christensen points to the growing ambition for digitalization. While there have been significant investments and advancements, he also notes that the industry hasn’t fully met the high expectations set a decade ago. Many digital initiatives, especially those involving greenfield projects, haven’t delivered as hoped, with a lot of capital wasted. One key issue was the overestimation of how quickly customer behaviors would shift to purely digital channels, neglecting the importance and cost of traditional distribution channels, such as brokers and agents. However, Christensen acknowledges that the industry has learned valuable lessons, leading to a more balanced approach where digital tools now support intermediaries while also expanding direct-to-consumer offerings.

Of course one of the major obstacles in the way of continued transformation is the complexity and risks involved in digital transformation, particularly for legacy insurance systems. Christensen explains that many companies have been slow to modernize their core systems, which is critical for true digitalization. While there has been progress in front-end digitization, core systems still need to be replatformed to enable meaningful transformation. This process is costly, risky, and time-consuming, but necessary to support the development of new products and improve customer engagement.

Could AI hold the answer?

Discussing AI and its role in life and health insurance, Christensen outlines how Swiss Re is leveraging both traditional AI and generative AI (Gen AI). We find out three key areas where AI is being used. They are enabling existing tools to operate more efficiently, improving work and deployment efficiency, and exploring its potential in underwriting. Unsurprisingly for a company of their size, Swiss Re are also investing in data-driven underwriting models and integrating AI to streamline processes, while also carefully exploring how AI can revolutionize underwriting itself.

However, the major concern that Christensen outlines here is that as AI models become increasingly accurate at predicting risks, it could disrupt the fundamentals of insurance, which operates on a collective risk-sharing model. This is where regulatory oversight comes in to ensure that AI is deployed responsibly, particularly in underwriting, where accurate risk prediction could lead to discrimination or undermine the social purpose of insurance.

Christensen emphasizes that while AI and technology are transformative, they won’t replace human involvement in insurance entirely. He points out that the assumption that digital tools would eliminate the need for agents and brokers was flawed. The industry is now moving toward a model where intermediaries are empowered with digital tools to offer more advice-driven services, rather than being sidelined. So there’s optimism but as others have defined, there is a balanced approach to the technology.

Toward the end of the discussion, Christensen reflects on the long-term nature of life insurance, which requires companies to think beyond current trends and anticipate future societal needs. What excites him most about the industry is its social mission—being there for individuals and families in times of unexpected need. He sees a growing protection gap, particularly in underserved areas, and believes the industry must address the challenges of distribution and technology costs to close this gap and provide coverage where it’s needed most.

It’s a great addition to our series of Virtual Arena profiles and highlights the fascinating developments taking place in insurance. Catch more conversations just like this one, right on our website.