Digitalization in the insurance industry
Digitalization in the insurance industry refers to the use of technology to enhance processes such as insurance operations, customer service, and risk management. Digitalization is transforming traditional practices in the insurance industry, bringing new business models and customer experiences. It also improves process efficiency, reduces costs, and increases transparency. I work for an international insurance company, where the opportunities of digitalization are extensively utilized, and new possibilities are constantly being explored. Below are a few concrete examples from my experiences related to digitalization in the insurance industry:
- Improving Customer Experience – Customers can manage their insurance matters (policy documents and terms, bills, certificates of insurance, claims reporting) through mobile apps and online services. Some insurance companies use chatbots that provide customer service 24/7.
- Predictive Analytics – Analyzing risks and large data sets with the help of artificial intelligence (my employer uses AI in risk selection, which streamlines the new sales process).
- Automation in Claims Processing – Some of the largest insurance companies use automation in processing claims for more straightforward insurance types.
- Cloud Services – Cloud-based storage services enable secure archiving of massive amounts of data without incurring significant costs.
Risks of open digital society
The insurance industry handles large amounts of personal data, such as health information, financial data, and personal details. Therefore, it is natural that the data protection reform, which came into force in 2016, affects the insurance sector prominently. The General Data Protection Regulation (GDPR) aims to protect individuals when their data is processed. It also helps individuals to have better control over their personal information. (EUR-Lex, 2022.)
When reflecting on the risks of digitalization in my own field, the insurance industry, my attention is drawn specifically to the handling of personal data. The risks arise from the extensive use of email, cyberattacks and disruptions targeting insurance companies’ systems and online services, as well as data archiving. A claim decision sent to the wrong address is a clear data protection breach that must be documented and reported to the relevant parties. Insurance companies are large institutions that generate significant profits for their shareholders, making them attractive targets for criminals in terms of cyberattacks and financial demands. All the factors mentioned above are areas where I, too, have had to pay special attention.
In my personal life, I have also noticed some effects brought by the data protection reform. For example, when I have entered personal data in a form or survey, I have been able to choose that my data will not be used or stored for longer than necessary. I can also influence whether I will receive personalized advertisements based on the websites I have visited or the applications I have used. The number of promotional messages I receive via email and text messages has also decreased, as I can control from which sources I want to receive them.
When considering the positive and negative effects of the data protection reform, I notice that the impact clearly leans towards the positive. From an individual’s perspective, privacy has improved significantly, and they have the ability to control the storage of their data, as I described earlier. GDPR has also introduced requirements for data collectors, such as companies, which means they must invest more visibly in data security practices. I believe the reduction in advertising is generally a positive thing for individuals.
The negative effects of the data protection reform seem to be more focused on the business world. GDPR includes extensive requirements that have required significant financial investments from companies. The data protection reform has brought system changes and training related to them, as well as recruitment costs in larger organizations for data protection officers. Smaller companies, on the other hand, need to acquire sufficient data protection expertise from outside, which brings additional costs. While reduced advertising is generally positive for individuals, for businesses, it can be seen as a negative development, as it requires companies to reach consumers more effectively through other channels.
AI in the insurance industry
I asked ChatGPT a few insurance-related questions, which allowed me to form a good understanding of its ability to provide answers. I asked some questions related to risk selection and the insurance risks of certain industries. I was surprised by how good the answers were. The AI was able to identify and describe the risks of industries in great detail, and the responses were very similar to what I would have written myself. So, it’s possible to gain valuable information about the risks of various industries from an insurance perspective using these responses.
Next, I asked a few more current questions related to the market situation of specific insurance products. At this point, I noticed that the AI’s answers were somewhat vague and straightforward, despite the fact that the challenging market conditions of a certain insurance type have been reported in the news in recent years. So, while the AI can effectively describe the risks of different industries, it doesn’t seem to recognize current information about the market situation of specific insurance types very well. Therefore, I could use the AI for general insurance-related questions, but I wouldn’t rely on it to form an understanding of the current situation.
Overall, I view AI as a welcome addition. AI brings significant improvements to process efficiency and the quick gathering of information. Even in large companies, a significant amount of manual work is still done, which could be replaced by AI. With AI, companies can also offer straightforward customer service, allowing consumers to receive support around the clock. AI is a great support tool in work and study, but users must also always remember that the information provided by AI may not always be reliable, fact-based information.
What I learned?
Through this task, I learned more about the impacts that the data protection reform and digitalization have had on various industries. I also deepened my understanding of how these factors have affected the insurance industry. It was also very interesting to test the capabilities of artificial intelligence in relation to the insurance sector, and I was positively surprised by its performance. In the future, I will definitely use AI in my work for tasks where I aim to validate my own views and decisions.
Sources
EUR-Lex 2022. Yleinen tietosuoja-asetus (GDPR). Verkkojulkaisu. Yleinen tietosuoja-asetus (GDPR) | EUR-Lex. Viitattu 17.3.2025.
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