The insurance industry is constantly evolving, with companies seeking innovative ways to improve customer experience and streamline operations. In recent years, advancements in artificial intelligence (AI) have opened up new possibilities for insurers. One such breakthrough is the integration of ChatGPT (Generative Pre-trained Transformer) technology, a cutting-edge natural language processing model developed by OpenAI.
There are myriad uses for such technology both to the advantage of customers and insurers alike. There is no doubt that AI could revolutionise the automating of processes and collection of MI to allow on-going enhancement to the customer experience. One potential advantage of ChatGPT that is already being applied in protection insurance is its ability to facilitate meaningful and engaging conversations with customers. By leveraging natural language understanding and generation capabilities, insurers can, and do, deploy chatbots powered by ChatGPT to interact with policyholders. These chatbots could potentially be used to respond to inquiries, guide customers through the insurance process, and offer personalised recommendations based on individual needs and circumstances.
ChatGPT can simulate human-like conversations, ensuring a seamless and empathetic customer experience. Policyholders can discuss coverage options, policy terms, and claims processes in a conversational manner, eliminating the need for customers to navigate complex insurance jargon or sift through extensive policy documents. However, the ChatGPT system is not regulated or licensed to offer financial advice, so there are certainly barriers to how it could be applied. One would hope then that adequate warnings are clearly visible to consumers.
What is ChatGPT?
ChatGPT works by attempting to understand the prompt the user gives it and then returning strings of words that have the highest probability of being able to reply to the prompt in a coherent way.
The GPT model was trained on a massive collection of different written media including books, articles and the internet, which helped it to learn the patterns and relationships present in language. When supplied with a user prompt, the model creates a probability distribution over the vocabulary it has learnt and then samples from this to generate the next word. When creating the response, it's not just predicting the next word that might make sense; it's also attempting to predict the next sentences or paragraphs.
ChatGPT looks very impressive at first glance but the probabilistic approach to generating the next words leads to several known limitations or risks that any company looking to use ChatGPT should be aware of as follows:
1. ChatGPT can ignore instructions. The user may supply explicit instructions in their prompt, but ChatGPT will not always follow these.
2. It can produce hallucinations. In other words, ChatGPT will present incorrect facts but in a very convincing way.
3. There can be a lack of interpretability or referencing. Users won't be able to understand how or why ChatGPT gave a particular answer, and any answer may have to be separately fact-checked.
4. There can be bias. Since the ChatGPT model was trained on a large volume of documents, many of which contained biases, incorrect facts or harmful content, the model itself may also contain these biases or misinformation.
How can ChatGPT benefit consumers?
When researching this article, I asked ChatGPT “Why should I buy Critical Illness Insurance?”. The response was almost instantaneous, and this was the outcome.
Why should I buy Critical Illness Insurance?
Critical illness insurance is a type of insurance policy that provides a lump sum payout if you are diagnosed with a serious illness, such as cancer, heart attack, stroke, or kidney failure. Here are some reasons why you might want to consider buying critical illness insurance:
1. Financial protection: A critical illness can be expensive to treat, and it can have a significant impact on your finances. Critical illness insurance can provide a lump sum payment that can help cover medical expenses, living expenses, and other costs associated with your illness.
2. Peace of mind: Knowing that you have critical illness insurance can provide peace of mind and reduce stress during a difficult time. You can focus on your recovery without worrying about the financial consequences of your illness.
3. Supplement to disability insurance: If you become disabled due to a critical illness, disability insurance can provide income replacement. However, disability insurance may not cover all of your expenses. Critical illness insurance can provide additional funds to help cover expenses that are not covered by disability insurance.
4. No restrictions on use of funds: The funds received from critical illness insurance can be used for any purpose. You can use the funds to pay medical bills, replace lost income, or even take a vacation to help you recover.
5. Lower premiums for younger and healthier individuals: Premiums for critical illness insurance are typically lower for younger and healthier individuals. If you wait until you are older or have health problems to purchase critical illness insurance, the premiums may be higher, or you may not be able to get coverage at all.
Overall, critical illness insurance can provide financial protection and peace of mind in the event of a serious illness. If you are concerned about the financial impact of a critical illness, it may be worth considering purchasing this type of insurance.
This was quite a basic response, but it was more than I was expecting. It covered many areas you would hope it should, even referencing how it could supplement Income Protection insurance.
Admittedly, the question asked was quite generic, but the response did not include things such as what an appropriate level of cover might be. However, given the limited information provided, the response was impressive. I therefore asked the system a further question with some additional information to see if the response was improved:
“I am a 30-year-old male, with no health problems, I earn £30,000 a year, am a non-smoker. I am currently single but one day hope to be married with children. Can you advise on my protection insurance needs?” This was the response:
“Certainly! Based on the information you provided, here are some types of protection insurance that you may want to consider:
1. Life Insurance: Life insurance provides a financial benefit to your beneficiaries in the event of your death. Given your future plans of getting married and having children, life insurance can help provide financial support for your loved ones in case of an unfortunate event. It can help cover expenses such as mortgage or rent payments, education costs for your children, and everyday living expenses.
2. Income Protection Insurance: Income protection insurance can provide a regular income if you are unable to work due to illness, injury, or disability. Considering your current income and future financial responsibilities, having income protection insurance can help ensure that you have a replacement income to cover your living expenses and maintain your standard of living.
3. Critical Illness Insurance: Critical illness insurance pays out a lump sum if you are diagnosed with a specified critical illness, such as cancer, heart attack, or stroke. This can provide financial support to cover medical expenses, treatment costs, or any necessary lifestyle adjustments during your recovery.
4. Disability Insurance: Disability insurance provides financial protection in the event that you become disabled and are unable to work. It can help replace lost income and cover ongoing expenses during your disability.
It's important to carefully assess your specific needs, budget, and long-term goals when considering protection insurance. It may be beneficial to consult with a financial advisor or insurance professional who can provide personalized advice based on your individual circumstances. They can help you determine the appropriate coverage amounts and policy options that align with your needs and budget.”
Again, this was quite a generic response, and it was interesting to note that it mentions Income Protection insurance and Disability insurance, which may reflect regional differences for products that are available in certain markets. However, it is still potentially useful for a young person considering obtaining some form of protection cover. However, what the response highlighted to me, was that it directed the person to a financial advisor, whereas the previous response did not. This demonstrates that answers are not always consistent with each other and the framing of the question to the tool is important.
To further test the tool’s capabilities, I asked it another question; “I have a neuroendocrine tumour. Can I claim on my Critical Illness policy” The response was as follows:
“I'm not an insurance expert, but I can provide some general information on critical illness policies. Whether you can claim on your critical illness policy for a neuroendocrine tumour would depend on the specific terms and conditions of your policy.
Critical illness policies typically have a list of specified medical conditions that are covered, including certain types and stages of cancer. Neuroendocrine tumours can fall under the coverage of critical illness policies, but it would depend on how the policy defines and includes such tumours.
To determine if your neuroendocrine tumour qualifies for a claim, you should carefully review your policy documents or contact your insurance provider directly. They will be able to provide you with accurate information regarding the coverage and the specific conditions that are eligible for a claim under your policy.
It's important to note that each insurance policy can have its own terms, exclusions, and limitations. Therefore, it's essential to thoroughly understand the details of your policy and consult with your insurance provider for personalized advice regarding your specific situation.”
Without giving ChatGPT the full histological diagnosis, or even the policy definition, the response was still quite useful and from an insurers point of view, helpful that it will direct a claimant to their policy terms and conditions so that hopefully they are more informed before contacting their insurer.
However, what was most interesting was the first sentence “I'm not an insurance expert……” It did not include this when I asked it why I should buy Critical Illness (or Life insurance or Income Protection, which I also asked).
How can ChatGPT benefit insurers?
The examples above were intentionally used to see how this technology can help consumers but it also has the capability to help insurers across all disciplines such as new business, underwriting and claims.
To see how this may work in practice, I asked the tool the following question: “Can you write a letter to a policy holder as to why we declined their claim for cardiomyopathy?” This was the response:
“Subject: Explanation of Claim Denial for Cardiomyopathy
Dear [Policy Holder's Name],
I hope this letter finds you well. I am writing to provide you with an explanation regarding the recent decision to decline your claim for cardiomyopathy under your insurance policy. We understand that this news may be disappointing and unsettling, and we want to ensure that you have a clear understanding of the factors involved in reaching this decision.
After a thorough review of the information you provided and a careful assessment of your policy coverage, it was determined that your claim for cardiomyopathy does not meet the eligibility criteria outlined in your policy. The decision to decline the claim was based on the following reasons:
1. Pre-existing Condition: Our records indicate that you were diagnosed with cardiomyopathy before the effective date of your insurance policy. According to the terms and conditions of your policy, pre-existing conditions are typically excluded from coverage during the initial waiting period. As a result, claims related to pre-existing conditions are not eligible for reimbursement.
2. Waiting Period: Your insurance policy includes a waiting period for certain medical conditions, including cardiomyopathy. During this waiting period, which is stated in your policy documents, coverage for specific conditions is temporarily restricted. Regrettably, the expenses incurred for the treatment of your cardiomyopathy were claimed within the waiting period, and therefore, fall outside the scope of the policy coverage.
3. Policy Limitations: Every insurance policy has defined limitations and exclusions that specify the scope of coverage. In reviewing your policy, we have found that cardiomyopathy is explicitly excluded from coverage due to the nature of the condition and associated risks. As a result, we are unable to provide reimbursement for the expenses related to the treatment of cardiomyopathy.
We understand that this news may be disappointing, particularly during a challenging time when you are dealing with your health concerns. We strongly recommend reviewing your policy documents and contacting our customer service department if you have any further questions or require clarification regarding the coverage details.
Please be assured that we remain committed to assisting you with any other eligible claims or inquiries you may have. Our team is dedicated to providing the best possible service and support to our valued policyholders.
Thank you for your understanding in this matter. We appreciate your continued trust in our company. Should you have any questions or require further assistance, please do not hesitate to contact our customer service department at [customer service number] or via email at [customer service email].
Wishing you good health and well-being.
[Your Insurance Company's Name]”
Clearly this response would need some editing to make it suitable for an individual response. However, this is a well-constructed letter that is also empathetic to the claimant. What was impressive was the detail provided as to why the claim was declined, and the output was quite succinct and so with additional parameters, has the potential to be extremely helpful to insurers. Junior claims assessors who may lack the knowledge, experience or confidence in constructing a decline letter could use it to help them develop.
ChatGPT has so many applications and its potential is unfathomable, and this article has only scratched the surface as to how it can be used. By leveraging its natural language understanding and generation capabilities, insurers can enhance customer engagement, streamline processes, and with the right regulation, even deliver tailored policy recommendations.
The integration of ChatGPT not only has the potential to benefit insurance companies by increasing operational efficiency but also allows policyholders to become more informed. As the insurance landscape continues to evolve, embracing AI technologies like ChatGPT will be key to staying competitive and meeting the ever-growing expectations of today's consumers.
At SCOR, we are working hard to understand how GPT technology can transform the way we work and the solutions we can offer our clients and their customers. We would be very interested to hear from you if you would like to discuss this further with us.