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AI can notably improve combined ratio (COR) for insurance companies

Innova-tsn Culture
News
Mar. 2025
 

AI can notably improve combined ratio (COR) for insurance companies  

[Press Release]  Innova-tsn has presented the findings of its Insurance Industry Customer Management Report 2024 in the Insurance Week 2025. Data availability, regulatory compliance and training are key for organisations to adopt AI. AI can reduce the time it takes to sort and analyse complex customer cases from almost half an hour to just seconds, increasing response accuracy to 85%, thus improving operational efficiency.   The insurance industry is at a pivotal moment, driven by artificial intelligence (AI) as a driver of transformation. This technology is already revolutionising various aspects of the business, from product customisation to the optimisation of internal processes. However, its adoption presents significant challenges in an industry marked by a complex regulatory environment, such as the need to ensure high-quality data, or to attract specialised talent. In this context, companies are faced with the task of implementing AI strategically and responsibly to remain competitive in a rapidly evolving market.  During the Insurance Week, organised by INESE, Innova–tsn, a Spanish technological consulting firm specialised in end-to-end data lifecycle and artificial intelligence, gathered experts to analyse the impact of this transformation. The event served as a platform to present the key pillars driving the successful adoption of AI in the sector, as well as specific examples of how this technology is generating tangible results. These aspects, some of which were already featured in Innova-tsn’s latest ‘Insurance Industry Customer Management Report 2024′, offer practical guidance for insurers looking to lead innovation in an ever-evolving market.     Pillars of an effective implementation To address the challenges and seize the opportunities presented by AI in the insurance industry, it is important to have a comprehensive and well-structured strategy. Innova-tsn experts stress the importance of a holistic approach, from data management to regulatory compliance and staff training. Based on their industry experience, they highlight seven key pillars for effective AI adoption in insurers: 
  1. Data availability: Quality of data is the foundation any effective AI model is built on. Currently, only 30% of insurers have an advanced customer file, which hinders service customisation and operational optimization. It is therefore crucial to carry out a thorough census and a meticulous classification of the available information.   
  2. Regulatory compliance from the beginning: 52% of insurers identify legal and ethical implications as a significant challenge in adopting AI. The new EU AI Act imposes strict transparency and control requirements on AI-based systems. Against this regulatory backdrop, insurers must integrate compliance into their strategies from the early stages of designing their AI systems.
  3. Staff training: The scarcity of AI-skilled professionals is another major obstacle the industry faces, reported by 55% of insurers. It is therefore imperative to invest in intensive training programmes and foster a data-centric organisational culture.
  4. Ethical and responsible use of AI: Trust is the cornerstone of any industry and especially, the insurance industry. For this reason, it is essential to develop and implement AI so that it respects and protects the rights and interests of customers. This means to set sound ethical principles which guide every decision from the design of algorithms to the interpretation of results.  
  5. Clear allocation of roles and responsibilities: Only 27% of insurers have centralised responsibility for AI, while 73% distribute it across several areas, which can make implementation difficult. In this regard, it is essential to establish a clear governance framework to ensure consistent and effective implementation.
  6. Detailed implementation plan: It is essential to develop a meticulous implementation plan that sets clear goals, allocates adequate resources and defines realistic timelines, allowing for adaptation to technological and regulatory changes, but also keeping on track with the company’s strategic goals and with an eye on the return on investment, even if this is in the medium or long term. 
  Success stories in the insurance industry The effective implementation of AI in the insurance industry is a fact and is already bringing tangible benefits. Innova-tsn, through its experience with several customers from the industry, has shown how the strategic application of AI can transform key processes and significantly improve operation effectiveness and customer experience. Last 20 February, during her Insurance Week conference, Begoña Vega, Head of AI Models & Applications, AI Solutions & Strategy at Innova-tsn presented to the audience some of the company’s success stories, such as the following:  
  • Improved customer experience by means of Gen AI 
  • Smart automation in call management 
  • Predictive cost modelling in home insurances  
  • Creation of a predictive customer evaluation model 
  • Implementation of an AI system to generate customised automatic responses.  
   In the words of Begoña Vega, Head of AI Models & Applications, AI Solutions & Strategy at Innova-tsn, these tools make it possible to “identify customer pain points and generate automated responses that go beyond the generic, showing empathy and offering specific solutions.”