A growing number of co-operative and mutual insurers are using artificial intelligence (AI), a study reveals.
Sixty-two per cent of the 52 International Cooperative and Mutual Insurance Federation (Icmif) members surveyed reported that they are already using AI, with a further 19% planning to implement some form of AI tech within the next year.
Of those already using AI, 50% are using machine learning, 33% are using robotic process automation, and 31% are using predictive analytics.
Thirty-one per cent are using generative AI, such as generative pre-trained transformers (GPTs) and/or large language models (LLMs), while 71% said they are investigating and/or intending to adopt some form of gen AI technology (such as GPTs or LLMs) in the next 18 months.
Some of the top uses of AI reported in the study include predictive analysis, claims processing, fraud detection and prevention, customer support, and underwriting and risk assessment.
The main reasons given for leveraging AI technology were to improve efficiency, enhance customer experience and increase profitability.
When it comes to Icmif members’ co-operative and mutual status, 97% of members surveyed said that AI technologies align with co-op and mutual principles. But a significant number of respondents also felt there were additional ethical and regulatory challenges because of their structure.
Asked to elaborate on how AI aligns with co-op and mutual principles, one respondent said: “AI in various forms has been around a long time and is not incongruent with mutuality. It can drive efficiency which can sometimes be a weakness in mutuals.”
Another said they believe AI aligns with their principles, particularly in relation to co-operation among co-operatives, saying: “AI can enhance collaboration between co-operatives through shared platforms and data analysis, promoting mutual support and learning.”
And another said they “firmly believe that AI technologies align with and support our co-operative and mutual principles. By strategically integrating AI, we can enhance our ability to deliver on our core mission of protecting and enhancing the lives of our customers and rural communities through exceptional, personalised service. However, we recognise that AI should complement, not replace, the human touch that is central to our values.”
Asked whether they agree there are additional ethical and regulatory challenges with the use of AI as a mutual/ co-operative insurer, the responses were more mixed.
Thirty-nine per cent of respondents agreed with this statement, 21% of respondents disagreed, and 39% neither agreed nor disagreed.
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A respondent who agreed with the statement said: “As a co-operative insurer, the explainability of the AI model is very important, where this is not the case for other insurers (using inexplicable black box AI could be acceptable for them). Fortunately, legislation (EU AI act) should create a level playing field.”
The report also includes use cases from members, showcasing the different ways they have implemented AI in their operations. For example, one Icmif member uses an AI fraud detection tool for claims, which utilises data from several insurers to detect if claims have been made with multiple insurers.
Another member reported having begun testing the use of LLMs to analyse underwriting manuals, in order to better understand, extract, and recall key information.
Icmif says it plans to share more best-practice examples of how its members are using AI and publish these on a member-only interactive webpage.
Ben Telfer, senior vice-president, Icmif, said: “Despite common challenges to AI adoption, we are pleased to share details of the range of solutions from members that are ensuring effective implementation of this technology and that the majority of Icmif members share a commitment towards responsible AI adoption.
“As capabilities and applications continue to rise, driven by generative AI, we expect that AI-related technologies will become increasingly integral to the operations and future growth strategies for Icmif member organisations.”
He added: “We hope that members will find great value in the insights from these survey results. Whilst there is so much content and theory about potential impact of AI within the insurance industry, we hope that the practical applications and successful use cases shared in this Icmif member-only report will help benefit member organisations in their own AI journeys.”
