Guidewire showcases GenAI's capabilities in insurance risks

Guidewire has used its ANZ Insurance Forum in Sydney last Friday to demonstrate how the notoriously risk-averse insurance industry is experimenting with generative AI and advanced analytics to streamline risk assessment and claims processing, with potential impacts on customer premiums. 

The California-headquartered software provider has carved a niche delivering cloud services for general insurers internationally, spanning initial underwriting and risk assessment through to claims lodgement and fulfilment.

"As much as I adore the insurance industry, we're not exactly known to be the most forward-thinking and aggressive in terms of change," the company's Chief Customer Officer, Christina Colby, told TechDay.

"The notion of risk is inherent in literally everything that happens. I think we are at this really interesting point now of being able to help carriers [insurers] with what we call 'insurance-grade AI'."

Delineated development

According to Colby, more traditional areas of predictive analytics and machine learning saw "brilliant models built all over the place, but the ability to scale and operationalise those was really constrained".

"Personally, I feel really strongly that the carriers who are going to 'win' in AI are the ones who figure out that orchestration as effectively as possible." 

For the insurance market, this has meant rethinking the established relationship between software developer and customer in order to deliver solutions that are fit-for-purpose, both to the industry collectively and to each individual insurer.

The emphasis, Colby said, revolves around leveraging the most suitable models and agents for each individual insurance business, regardless of whether the technology was created in-house by Guidewire or the insurer itself, and "operationalising them into the way that they work" in order to unlock its full capabilities.

"The delineation between which things customers want us to build wholesale versus the things they want to build themselves and have us enable, I think that blurred line is going to change more than anything over next five years," she said.

Reimagining care

Speaking at the forum on the topic of workers compensation, Guidewire's Chief Evangelist Laura Drabik said an estimated 50 per cent of insurance professionals are forecast to leave the industry within a decade, positioning GenAI as a knowledge retention safeguard.

Yet the technology is already delivering positive returns beyond insurers themselves.

Citing Guidewire's new report Reimagining Workers' Compensation in the Age of Generative AI, compiled in collaboration with PwC, Drabik noted that 60 per cent of workers compensation insurers see improved return-to-work outcomes for injured workers, thanks to the establishment of highly customised AI-generated care plans and access to fully personalised 24/7 support using GenAI-powered agents.

The technology is also being used to flag complex-cases earlier in the claims process, allowing them to be better assessed from the outset and progress closely monitored for the benefit of the injured worker's initial treatment, ongoing rehabilitation and staged return to work.

Furthermore, Drabik said that GenAI is being increasingly used to shift the insurance paradigm from loss control and passive risk assessment to proactive prevention.

"We have carriers that are using AI vision, that's embedded in on-site video monitoring, to identify hazards before claims happen. We also have other carriers that are using predictive analytics to identify physicians that overprescribe opioids," she said.

Pricing impacts

Given market concerns about the sustainability of insurance premium rises in recent years, which have been a leading contributor to inflation in Australia and other countries in the post-pandemic years, pricing and ROI on technology spend is a sensitive issue.

At face value, increasing speculative investment in intelligent technologies could stoke cost pressures that feed through into customer premiums. However, the insurance industry is seeking to recoup its tech spend by achieving tighter control over claims fulfilment – its biggest single cost component. 

This includes generating efficiencies across the insurance lifecycle, more sophisticated risk modelling and fraud detection capabilities, as well as future-forecasting for new and evolving insurance requirements, from driverless cars to intellectual property.

"When you think about all of the variables that change on a very consistent basis, and the maturity of the insurance market in Australia and New Zealand, minor changes in pricing are going to have massive impacts to the carriers – basically swapping market share," Colby said. 

As an example, Colby cited Guidewire's PricingCenter product, where integrating data visibility between an insurer's pricing, actuarial and IT teams has allowed for faster rollout of pricing decisions.

She said the traditional process involved a detailed review of historical data by actuaries, who then shared their findings with the pricing and underwriting teams. These divisions would then define their risk appetite and finalise pricing decisions, before passing them to IT teams to deploy in ratings engines for the next round of customer quotes.

"That process was typically six to nine months. We've got proof points that that can now be accelerated by up to 90 per cent," said Colby.

"If you have one carrier taking nine months to implement the pricing changes they want, and it's taking another carrier less than a month to do that, that is dramatically different. We just have to be more willing to self-disrupt, which is very scary for a very risk-averse industry."