[1mm Financial Talk] Insurance Companies Advance AI Technology... Expanding Investment and Application Scope

Kyobo and Hanwha Life Designated as Innovative Financial Services Based on Generative AI
Heungkuk and Dongyang Life Utilize AI for Product Development, Enrollment, and Fraud Prevention
AI Adoption Expected to Accelerate with Financial Sector Network Separation Regulation Eased

The insurance industry is advancing the sophistication of artificial intelligence (AI). While significantly increasing investments in generative AI infrastructure, it is gradually expanding the use of AI technology from face-to-face sales support tools to automated underwriting and product development.

Kyobo Life Insurance announced on the 10th that it plans to pilot the 'Coverage Analysis AI Supporter' within this year and utilize it in the field starting next year. This is one of the 10 technologies designated as innovative financial services based on generative AI by the Financial Services Commission the day before. It is a service that provides agents with customized explanations and scripts based on customers' coverage analysis reports.

Previously, many agents recommended insurance to customers by focusing only on commissions favorable to themselves. A representative example was the short-term payment whole life insurance that caused excessive competition earlier this year. Kyobo Life expects that when agents use the AI Supporter, insurance design centered on customer coverage rather than commissions will be possible. A Kyobo Life official said, "The AI Supporter processes vast amounts of coverage analysis data based on AI and easily summarizes it to deliver to agents," adding, "Customer consultation time will be shortened, and they will receive trustworthy coverage proposals."

An illustration depicting the insurance enrollment process using artificial intelligence (AI) by ChatGPT. Photo by ChatGPT

Hanwha Life Insurance also had its 'Generative AI-based Customer-tailored Speech Generation and Virtual Conversation Training Solution' designated as an innovative financial service. This technology provides agents with insurance sales speech incorporating the latest news. It is expected to be used for encouraging customers to purchase insurance or training agents for customized responses according to customer situations.

Hanwha Life recently expanded its AI investments to the global stage. Following the launch of its AI Research Institute in June, on the 3rd it opened the Hanwha AI Center in San Francisco, USA, together with three Hanwha financial affiliates including Hanwha General Insurance and Hanwha Asset Management. This center serves as an outpost for collaboration with leading local universities, AI startups, and investment firms, as well as AI research. Kim Rae-yoon, head of the Hanwha AI Center, said, "The Hanwha AI Center will play a key role in securing Hanwha Financial's AI leadership by serving as a global hub in the AI field."

Heungkuk Life Insurance is actively utilizing AI in insurance product development. On the previous day, Heungkuk Life introduced a product that extends the coverage period of dementia insurance to lifetime. It revises existing dementia insurance to cover nursing diagnosis fees, nursing living expenses, home care benefits, and facility admission benefits through special contracts. When creating this product, Heungkuk Life predicted accident occurrence rates using its self-developed AI moral prediction model. Through this, it concluded that home care benefits and facility admission benefits could be provided as immediate coverage types, thereby expanding coverage. Heungkuk Life has been applying AI technology in various ways, including introducing AI into its insurance fraud analysis system last October.

Dongyang Life Insurance is increasing the speed of insurance claim payments by automatically underwriting customer claims using AI. To this end, it completed the advancement of its insurance claim risk detection system in October. With the introduction of this technology, Dongyang Life's automatic underwriting rate for insurance claims expanded from the early 20% range to 45%. Ninety-nine percent of all insurance claims are processed within one day from receipt, review, to payment.

Following the financial authorities' announcement in August to ease network separation regulations in the financial sector, the frequency of AI use in the insurance industry is expected to increase further. With the relaxation of network separation regulations, insurance companies will be able to utilize generative AI services using external clouds in their own services. For example, they will be able to link their key data with ChatGPT and make it accessible externally via mobile devices. An insurance industry official said, "Due to network separation regulations, AI adoption has lagged compared to other advanced countries like the U.S.," adding, "It is necessary to accelerate the phased relaxation of network separation regulations with more speed."