AI: transforming industries, workflows – and now insurance
Artificial intelligence (AI) has long been a topic of discussion in the tech industry, but its recent advancements have propelled it into mainstream business conversations – and that now includes captive insurance.
Some the advances that have been made in AI – and how these might apply to insurance – were the topic of a panel discussion, which took place at the annual CICA conference, taking place this week in Tucson, Arizona.
The panel started by stressing that AI is not a new concept, but it is being used now much more widely than just a year ago.
As Kayvon Deldar, vice president of partnerships at Voxel, noted: “AI is not a new concept... Initial AI models even started in the 70s and 80s.” However, it was the emergence of generative AI, particularly ChatGPT, that significantly amplified public interest. The rapid evolution of AI, with deep-sea models and autonomous agents becoming more prominent, has changed how businesses interact with technology.
Deldar highlighted that AI has been present in everyday applications for years, from Netflix recommendations to voice assistants like Alexa. However, he emphasised that what makes AI exciting today is “the sheer amount of money going into it and the innovations emerging as a result.”
New AI-driven models and tools are constantly being developed, including advancements from China, which is introducing its own AI competitors. Deldar also highlighted the rise of AI agents, which function as “automated task managers” capable of handling complex workflows, such as booking travel or managing insurance claims.
Despite the enthusiasm surrounding AI, Dave Netti, senior vice president and director of risk services at Captive Resources, urged businesses to recognise what AI is not. “The concept that AI is perfect, that it's error-free – that's just not true,” he explained. AI operates based on data patterns and models, which means it can produce errors known as “hallucinations”—instances where AI generates incorrect or misleading information.
Netti also stressed that AI is not a replacement for human workers. While it can handle repetitive tasks efficiently, it lacks the ability to interpret emotions, context, and non-verbal cues, which remain essential in many professional roles. “AI is there to help make people more efficient,” he clarified, “but it is by no means going to replace all jobs.”
Another critical limitation Netti highlights is the need for continuous maintenance. “AI is not self-autonomous. You have to feed it information because we’re always evolving,” he noted. Without proper updates and oversight, AI models can quickly become outdated, limiting their effectiveness.
Colin Donovan, president of STICO Mutual Insurance Company, RRG, outlined both the benefits and challenges of AI implementation. “The main benefit is the automation of repetitive tasks... it allows more room for creativity,” he explains. AI can streamline data entry, reduce human error, and improve decision-making. Donovan gives an example from his own company, where AI is used in a policy and claims management system that can scan applications, pre-populate fields, and even detect discrepancies in legal invoices.
However, Donovan acknowledged the challenges that come with AI adoption. “It’s only as smart as the data you provide,” he warned, highlighting that AI’s effectiveness depends on the quality of the input data. Additionally, developing and maintaining AI systems is expensive, and many businesses struggle to maximise their AI investments due to a lack of expertise in crafting effective AI prompts and queries.
One of the most potentially impactful areas where AI is being utilised is contract review. Netti described how AI is revolutionising industries like construction, where companies deal with extensive legal documents. “AI can take that contract, review it against standard language, and provide a summary,” he explained, reducing a labour-intensive process from days to hours.
Training and risk management are other domains benefiting from AI, the panel stressed. AI-powered dashboards and telematics systems now allow companies to tailor training for drivers based on their specific behaviours, such as excessive speeding or harsh braking. This personalised approach to training has been shown to reduce accident rates and improve compliance.
Despite the hurdles, AI’s role in business is set to expand. Donovan shared that his company is working on AI-driven policy comparison tools that will help insurers analyse coverage differences against competitors. “From a marketing perspective, this could provide a lot of assistance,” he says.
The potential of AI is undeniable, but as the panel highlighted, businesses must approach it with a balanced perspective—leveraging its strengths while being mindful of its limitations. AI is not a magic solution, but when implemented thoughtfully, it can be a powerful tool for efficiency, innovation, and competitive advantage.
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