Generative AI in Insurance: Aligning Technology Deployment with Customer Trust

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The insurance industry stands at a transformative crossroads. Generative artificial intelligence (GenAI) is fundamentally reshaping how customers interact with insurers throughout their journey, from initial information gathering to claims settlement. Yet this technological revolution brings with it critical questions about trust, transparency, and the value proposition for both insurers and their customers.

The Dual Nature of AI Adoption

The transformation happening in insurance is unique in its bidirectional nature. On one side, insurers are deploying sophisticated AI tools to enhance customer interactions, streamline operations, and improve decision-making. On the other, customers are independently using general-purpose AI applications like ChatGPT to inform their insurance decisions. Recent research shows that approximately 68% of customers have used generative AI when shopping for insurance, with this two-way adoption creating both opportunities and challenges for the industry¹ .

This dual adoption pattern creates a complex dynamic. While insurer-provided tools offer greater control and compliance oversight, they must compete with the expectations shaped by customers' experiences with consumer AI applications. Insurers face the challenge of developing strategies that both optimize their internal AI capabilities and acknowledge the AI-empowered consumer who arrives with pre-formed expectations and information.

The Trust Equation

Despite rapid adoption, a significant trust gap persists between insurers and customers. Survey data reveals that only 26% of customers trust the reliability and accuracy of advice from generative AI. This skepticism stems from several legitimate concerns including privacy vulnerabilities, data security risks, potential for scams, and the possibility of inaccurate responses without adequate human oversight.

The disconnect becomes even more pronounced when examining specific use cases. While 66% of insurance executives report progress on AI assistants and 65% on augmented customer service, only 29% of customers feel comfortable with AI virtual agents providing customer service, and merely 23% trust them to provide insurance advice² . This gap highlights a fundamental misalignment between what insurers are prioritizing and what customers actually want from AI integration.

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Customer Expectations: Three Core Pillars

Research into customer preferences reveals three non-negotiable requirements for AI deployment in insurance³ :

• Accuracy Above All: Customers are acutely aware that AI can be confidently wrong. They expect insurers to validate AI outputs rigorously and ensure the accuracy of information presented to them. The phenomenon of AI "hallucinations," where systems generate incorrect or misleading information, poses particularly serious risks in insurance where misinterpreting regulations or policy terms could have significant consequences.

• Human Backup Remains Essential: While customers accept AI handling routine tasks, they insist on access to human support for complex or sensitive issues. The survey data shows that acceptance of fully automated AI services drops significantly for more complex tasks. Many customers remain uneasy with entirely AI-driven processes for major decisions like purchasing complex life policies or handling large claims without any human oversight. For critical outcomes, customers want human confirmation even if they trust AI's initial assessment.

• Transparency in AI Usage: Customers demand clarity about when they're interacting with AI versus humans, and they want clear explanations for AI-driven decisions. Whether it's understanding why AI recommended a particular product or why it declined a claim, transparency is paramount. This need for explainability is especially critical in an industry where compliance and regulatory scrutiny are non-negotiable, and where "black box" decision-making cannot be tolerated.

The Value Proposition: Speed, Personalization, and Efficiency⁴

Despite trust concerns, generative AI offers compelling benefits that insurers are rapidly capitalizing on. In claims processing, AI can achieve accuracy rates of 95%-99% in tasks like document classification and information extraction. This translates to dramatically faster claims settlements and improved customer satisfaction. Some insurers report that AI has raised claims accuracy by 30% through instant data cross-verification, while fraud detection has reduced false claims by 25%.

In underwriting, AI accelerates decision-making by consuming real-time data from multiple sources, enabling more precise risk evaluation and personalized pricing. Statistics suggest AI enhances pricing personalization by nearly 40%, making premium pricing more sensitive to actual customer profiles rather than broad demographic categories.

For customer service, AI-powered virtual agents provide 24/7 support, offering personalized explanations of complex policy language and guiding customers through claims processes. This level of accessibility and clarity builds confidence when done well, as customers receive tailored information rather than generic FAQ responses.

Bridging the Gap: Strategic Imperatives

For insurers to successfully navigate this transformation, several strategic imperatives emerge:

Design with Customer Preferences in Mind: Any generative AI initiative must align with what customers actually value. Innovations that fail to offer human support or that compromise privacy, accuracy, or transparency will face customer pushback regardless of their technical sophistication.

Embrace the Knowledgeable Customer: Insurers must acknowledge that customers arrive increasingly informed and AI-empowered. Rather than viewing this as a threat, forward-thinking insurers can design experiences that complement and enhance customer research, creating value through superior service and genuine expertise.

Implement Robust Governance Frameworks: Comprehensive governance that ensures transparency, privacy, and explainability is essential. This means developing AI that augments rather than replaces human expertise, with "human in the loop" workflows ensuring outputs are validated, especially in high-stakes domains.

Prioritize Responsible AI Development: Insurers should partner with organizations committed to responsible AI, including strong ethical guardrails, data privacy protections, and the ability to explain model behavior. Regular audits, employee training, and transparent data handling practices build the foundation for trustworthy AI deployment.

Looking Forward

The long-term success of generative AI in insurance depends on establishing trust through demonstrable fairness, transparency, and continued access to human support. Insurers must resist the temptation to pursue AI-driven efficiency at the expense of customer trust. The technology presents extraordinary opportunities to accelerate product creation, reduce time to market, and deliver truly personalized insurance solutions, but only if deployed thoughtfully.

Trust is the foundation of the insurer-customer relationship. Generative AI has the potential to enhance almost every stage of the insurance customer journey, but customers need assurance that fairness, accuracy, and human empathy remain central to insurance processes. The insurers who win in this new landscape will be those who recognize that AI is not just a technological upgrade but a fundamental reimagining of the customer relationship built on transparency, accuracy, and genuine value creation.

¹ The Geneva Association, "Generative AI in the Insurance Customer Journey" report.
https://www.genevaassociation.org/publication/digital-ai-transformation/gen-ai-insurance-customer-journey 

² IBM Institute for Business Value, "Generative AI in the Insurance Industry: You Can't Win if You Don't Play," October 2024.
https://www.ibm.com/thought-leadership/institute-business-value/en-us/report/insurance-generative-ai

³ Generative AI and the Insurance Customer Experience: Answering Questions of Trust, Transparency and Value" - The Actuary Magazine, December 3, 2025 https://www.theactuarymagazine.org/generative-ai-and-the-insurance-customer-experience/

⁴ The Geneva Association, "Generative AI in the Insurance Customer Journey" report. https://www.genevaassociation.org/publication/digital-ai-transformation/gen-ai-insurance-customer-journey 

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