Insurance Customers Keep an Open Mind on Artificial Intelligence, With Some Notable Exceptions
With each passing day, artificial intelligence (AI) is becoming more ingrained in all we do. From virtual assistants to image generators to chat bots, consumers in the United States are increasingly using AI, while growing more comfortable with it being a part of their daily life experiences. That includes their insurance experiences.
According to data collected by JD Power, insurance customers are keeping an open mind when it comes to AI’s role in their overall experience. However, while customers do have an open mind about it’s use that doesn’t mean there aren’t concerns about how insurance companies will use AI and more importantly who will truly benefit.
AI Use Grows, Despite Belief Companies Benefit More
The rate of AI utilization is growing but to whose benefit?
When asked who will see the most gain from insurance companies integrating AI into their solutions, 68% of customers say they believe the insurance company gets most of or all the benefits, while 26% say the benefits are shared equally between the customer and the insurance company. While consumers recognize the potential value of AI, it’s clear that they have serious doubts that investments in the technology are going to be made for altruistic reasons.
That’s not to say that consumers don’t recognize that they could benefit from insurers adopting more AI. Customers are most comfortable with AI when it is used to automate routine aspects of their experience, such as sending automated claim status updates (24%), managing their billing (23%) and answering basic customer service questions (21%). In contrast, when it comes to important decisions there is a lot of concern of leaving it up to the computers. Nearly half (47%) are somewhat or very uncomfortable with AI being used to process their claims, indicating a clear boundary between convenience and trust.
One-third (33%) of customers believe AI use in pricing insurance policies should be limited until companies can ensure it doesn’t introduce bias or violate ethical standards. Another 30% said AI should be limited to partial use that includes strong safeguards for fairness, explainability, and regulatory compliance. Just 15% of customers believe insurance companies should fully use AI to price their policies.
Selling the Benefit
As AI becomes a more integral part of customers’ daily lives, there appears to be growing acceptance of this technology making its way into their interactions with their insurance company. The difference, though, between customers’ willingness to use a virtual assistant and their hesitancy to accept AI in pricing their policy is that customers don’t immediately see a personal benefit in the latter that they do in the former. In fact, there is likely an inherent distrust in AI making an accurate read on underwriting decisions.
This should inform insurance companies’ strategies for further integration. Before doubling down on tech, companies need to peel back the curtain and explain the customer benefits to using AI in their decisioning. Insurers that can get that customer buy-in will have an easier time using AI to reshape their processes.
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This Insurance Intelligence Report is based on 2,099 responses from a market pulse survey conducted in mid-August . It was authored by Craig Martin, executive director, global insurance intelligence at JD Power. Please contact us at the numbers below to connect with the team or to learn more about the underlying research.
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Joe LaMuraglia, JD Power; East Coast; 714-621-6224; [email protected]