Harnessing AI in Annuities

If ChatGPT can write a joke, it can help you explain an annuity.

Artificial Intelligence is today’s hottest of hot topics across all industries, and the annuities market is no exception.

AI technology and machine learning is transforming traditional processes for financial advisors, agents, and carriers leading to improved efficiency, accuracy, and customer experience.

A question remains, however, as to what exactly can and cannot be automated, and how much human intervention will be required, as AI is increasingly integrated across the lifecycle of a product.

Here’s how AI could affect three types of processes within the annuity sector.

1. The Buying Experience

Consumers themselves are already turning to AI for a wide variety of reasons, from asking ChatGPT to tell a joke to generating a recipe to help use the items you have in your refrigerator.

As consumers continue to use AI in their everyday lives, it begs the question of how the technology can be leveraged by financial professionals and advisors to educate folks about more complex subjects, like annuities.

Annuities are commonly seen as some of the most difficult to understand financial products for a new investor.

Annuity advisors have long targeted opportunities to educate underserved markets using unique marketing and educational material.

Products such as Ignitor by AInsurme have begun using AI to power their platforms, with the aim of helping advisors educate their clients to understand fixed annuities and make informed decisions about their investments.

This platform is just one example of ways that advisors can leverage AI to help illustrate for their clients how different types of annuity products produce different results over time.

Investing in upfront educational solutions will help to address challenges with buyers lacking confidence in their understanding of what an annuity is and how it will benefit them.

AI will not eliminate the role of the financial professional, but rather it can be a tool to empower financial professionals to have more open and data-driven conversations with their customers.

2. Claims Processing

Advisors should be aware of carriers’ efforts to shift some of their processes to be more AI-driven, which can be a selling point to customers who are looking for efficient experiences through the life of their product.

Traditionally claims processing within insurance has been a time-consuming, manual task.

Now, AI-powered claims-processing systems offer insurance carriers’ back office teams the chance to enhance efficiency and accuracy.

Insurers can use AI algorithms to analyze policyholder information, claim forms, supporting documentation and external data sources.

By automating routine processes, insurers can reduce manual effort, expedite claims processing and provide faster responses to policyholders and beneficiaries.

For example, insurers can use AI to determine claim payouts based on a range of factors, including policy limits, riders, specific conditions and historical data.

While larger and more complex claims may still require human intervention, AI systems can manage straightforward cases, streamlining the overall claims processing workflow.

Gradually, these AI algorithms will become increasingly refined, enabling them to manage increasingly complex claims.

3. Fixed Indexed Annuity Index Management

With the growing popularity of fixed indexed annuities, as financial professionals we consistently see carriers looking for ways they can differentiate themselves.

One way is to use AI-enabled indexes that have the ability to quickly adapt to market changes based on continuous ingestion of data and the ability to analyze and make decisions on that data quickly.

Traditional rules-based indexes are often fixed to specific parameters set by analysts and do not offer quick adaptability to market changes like AI-enabled indexes aim to.

AI indexes strive to take some of the emotional human element out and leverage data from a wide variety of sources to optimize returns.

Financial professionals should be aware of these kinds of products as opportunities to provide options to clients that are more customized to their specific needs and risk profiles.

There is still a great deal to learn when it comes to the use of AI in this space, but those leading the charge are helping to define the path and further understand the balance of AI and human knowledge and experience.

Combining the power of AI and subject matter expertise of carriers and indexes will help to innovate future use of AI enabled indexes in future annuity products.

Advisors should be transparent about the role AI plays in different products, as some buyers may be skeptical and want to have more extensive data and education before making a decision.

A New Opportunity

The integration of AI technologies in the insurance industry presents a new opportunity for advisors, carriers and customers alike.

Automated claims processing systems streamline efficiency for carriers, while AI-powered indexes adapt quickly to market changes to meet customer needs.

Additionally, by bringing in innovative education techniques to the buying experience advisors can expand their customer base.

By embracing these advancements and fostering collaboration, advisors can spearhead utilizing AI to deliver enhanced customer experiences and operational efficiency, shaping the future of the insurance industry.


Danielle Lutkus is a principal consultant at Capco, a management and technology consultancy that serves clients in the financial services industry.

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