Boosting Insurance Distribution with AI
Despite technology advances in recent years, many insurers haven’t effectively modernized their distribution process. According to the Global Insurance Outlook 2025 from Deloitte, “the risk-averse nature of insurers’ cultures has generally reinforced a restrained pace in terms of its own innovation and modernization”, which, among other factors, puts them at a disadvantage in meeting today's customers’ expectations. We see several factors driving the hesitation to modernize such as:
1. Lack of skills in new technologies.
2. Caution due to uncertain ROI in a short timeframe.
3. Security and compliance concerns.
4. Respect of individual advice for often complex products.
The insurance companies that have invested in a human-centric technology strategy and roadmap have been able to manage and mitigate these factors while unlocking growth. The use of AI in the distribution of insurance creates new possibilities for significant improvement, potentially increasing the gap between the leaders and the laggards or enabling those trailing to leapfrog the competition. The combination of own data and AI enables more targeted and personalized customer relationships while achieving more efficiency (cost and time) and growth.
Today’s customers have higher and higher expectations of companies they interact with, including insurers. By using data effectively, insurers can better understand their customers’ needs aligning offers and interactions more closely with customers’ lives to build relevance and loyalty.
With the insurance industry moving more slowly than other industries in combining AI and personalized data, insurers who act now can gain a real competitive advantage. An example is a project by BCG with an insurer in Singapore, where AI increased the productivity of insurance advisors by 25%, leading to additional growth of 5-6%. This was achieved by generating the optimal combination of advisor, product, and conversion content for each customer.
The use of AI holds enormous potential for optimising the entire distribution process. An AI-supported process can now generate a personalized quote, delivered in the customer's preferred channel. It can also support sales agents and back-office staff in automating administrative tasks (manual tasks like managing incoming customer emails, filling out forms or entering data from documents) to free them up for more valuable tasks. It can help staff prepare for customer meetings, using AI-powered analysis to create a more customer-centric interaction and increase the chance of a sale. These examples together not only increase the conversion rate of offers but also reduce process costs and increase efficiency.
The below diagram shows various areas in an insurer's distribution chain where AI can deliver advantages:
There are many possibilities for optimizing the distribution process with AI. At vector8, we have developed several AI Accelerators which enable insurers to benefit from pre-configured AI modules that solve specific challenges in the distribution chain. In partnership with a leading Insurtech company, we have successfully deployed these accelerators to implement AI driven solutions to increase efficiency and lower costs in their distribution processes:
Our AI accelerators serve as building blocks to implement business solutions that solve challenges in the distribution process with AI, either individually or in combination. They are not SaaS products, think of them more as a large boost for your own solution. They are ready to be trained with your data and integrated into your environment. And when they are deployed, you own them and the code. Using these proven building blocks offers a faster and scalable entry into AI-supported innovation.
Based on our current vector8 AI accelerators, various business problems in insurance distribution can be solved to increase efficiency and growth. Some examples are:
1. Customer analysis to create tailored cross and up-sell offers depending on the customer’s insurance products, situation, and/or in comparison to similar customers.
2. Lead distribution, where our AI accelerator ensures that the most promising leads are assigned to the sales staff most likely to convert them.
3. Insurance comparisons and questions about insurance policies can be answered in real-time with the help of our AI-accelerator, significantly improving the personalization of offers and the quality of advice.
4. Sales staff compare multiple policies on a specific topic.
5. Sales staff/customer can ask questions about the content of existing policy documentation including coverages according to the policy/terms and conditions or about uncovered services and comparisons with other insurance coverages/terms and conditions.
6. During a customer conversation, the sales advisor is supported in discussing and recommending products or services.
7. Support sales staff in customer communication to ensure efficient, high-quality, context and customer-related communication.
The use of AI in insurance distribution offers enormous potential for increasing efficiency and growth as well as for personalising the customer interaction. Insurers that use these technologies have the opportunity to optimise their processes, improve the customer experience and realise potential growth. However, in each case, AI does not replace humans. It supports them as a useful tool in personalizing customer advice, simplifying administrative tasks and improving decision-making.
Companies that invest in AI solutions now can sustainably strengthen their competitive position and future-proof their sales process. The factors driving the slow modernisation of insurance distribution processes can be mitigated or even solved:
1. With the right partner, the capability gap in human resources and technology can be closed.
2. With vector8 AI accelerators, the risk of high investment and low profitability can be mitigated.
3. Governance and compliance can be built into your processes with a human in the loop reviewing all outputs.
4. Modernisation does not necessarily mean replacing individual customer advice. On the contrary, especially in the case of complex and advice-intensive insurance products, AI can improve the customer-centricity of the sales agent activities and support them in achieving a successful sale.
The AI applications we have already implemented show that starting to modernise the distribution process is not a distant future, practical examples already exist.
Are you ready for the next boost in your distribution processes?
Markus Pfister, Insurance Vertical SME at vector8
Markus has spent 25+ years building and leading delivery teams and projects for leading insurance companies, brokers and solutions providers. He is a solution architect, enabling him to combine both domain and technical expertise.
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