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Bain: Generative AI could boost insurers’ revenue by 20%

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The latest market analysis from Bain & Company, the management consultancy, has a lede-worthy takeaway: the firm estimates generative AI could drive $50 billion in economic benefits for insurers.

A lot of that uplift is expected to arrive in the form of top line gains. Bain’s models project potential a sales increase of 15-20%, which is more than the revenue growth many publicly-traded insurers post in an entire year.

That figure is especially notable in the context of the expected savings. Bain says to expect GenAI-enabled cost reduction opportunities in the 5-15% range. Putting the two data points side-by-side, that means the technology could impact insurers’ revenue more than their profitability, even though many current GenAI use cases focus on cost savings rather than new sales generation.

“The benefits will come through three routes: raising productivity and resizing the workforce; lifting sales through more effective agents and digital advice; and reducing commissions as direct digital channels gain share,” Bain partners Sean O’Neill, Rebecca Stephens-Wells, Bhavi Mehta and Harshveer Singh wrote in the report.

The study also maps out a few of the ways insurers can apply generative AI to realize those benefits. Notably, many of the near-term use cases Bain identifies are ones where many companies, insurers likely included, already use machine learning. Customer persona creation and personalized landing page creation are two notable examples.

Generative AI could allow insurers to perform those tasks more efficiently than earlier machine learning tools, for example by automating content creation. In the longer term, Bain also says the technology could power to new use cases that aren’t already being widely implemented by insurers. AI-powered sales and customer service agents are among the potential long-term applications the consultancy flags, along with “live sales nudges” designed to make human agents more productive.

“While generative AI is still in early days, insurers cannot afford to wait on the sidelines for another year,” the report concludes. “Harnessing the technology will require experimentation, training, and new ways of working—all of which take time before the benefits start to accrue.”

And our concluding take: if the potential economic benefits for the sector are around the $50 billion range, insurers will likely heavily prioritize generative AI in their IT budgets. Expect software vendors to launch more insurance-focused generative AI offerings to address that demand. If the B2B SaaS market is any indication, we can potentially also expect to see the emergence of niche AI vendors focused specifically on the insurance and financial services verticals.