AI and Underwriting: Helping (Not Replacing) Human Judgment

New AI technologies represent exciting possibilities in insurance, but balancing this new tech with a cautious and strategic approach—one that emphasizes the human element—will be extremely important going forward.

A decision maker’s assistant

In the underwriting space specifically, there’s no shortage of messy, complicated data. While large language models (LLMs) are designed to grapple with huge quantities of data, Laura McKiernan Boylan, Bestow’s VP of Underwriting Solutions, says, “an easy, initial application of such technology is actually to help humans cut through the clutter to find business insights and make better decisions themselves—not to make the decisions for them.”

AI and application fraud

Many leaders are also excited about AI’s potential to help fright fraud thanks to its ability to sift through, cross check, and verify large amounts of data. This optimism comes as a recent NerdWallet article shared that 21% of insurance applicants admit to lying on an application.

Beware of bias

Peter Eliason, Bestow’s VP of Data and Analytics, recently co-presented at the AHOU 2024 underwriting conference. Touching on how algorithms, if left unchecked, could potentially worsen bias in life insurance over time, he says, “It’s not set it and forget it. As time goes on, societal, demographic, and other factors can change, so we must be careful to monitor results on an ongoing basis to help keep potential biases at bay.”

This sentiment is echoed by Bryan Simms, co-founder and president of Mammoth Life, who shared his big plans for fighting bias in underwriting with Insurance Business Magazine. You can read more of his thoughts here.

Exercising cautious optimism

“This tech is here to stay," says Laura McKiernan Boylan, VP of Underwriting Solutions at Bestow. “But it will take time to evolve use cases to ensure the accuracy required for life insurance risk assessment, where we are looking for low-frequency, high-severity events.”

As carriers pour more and more resources into developing LLMs and generative AI models in search of maximum efficiency, it’s important not to lose sight of the big picture. The life insurance industry is about people, and these new tools should be viewed as just that: tools to help people work faster and smarter.