Generative Insurance: Innovating Latin America's Insurtech Wave

Leveraging lessons from recent years in digitalization and connectivity, insurance companies in the region have an opportunity to redesign their future.

According to the study Insurtech Global Outlook 2024, conducted by NTT DATA, insurance companies around the world are experiencing the third wave of innovation in the industry: generative insurance. This journey is not linear, with various stages overlapping and continuously generating challenges and opportunities. How can Latin American companies capitalize on these trends?

"Digital insurance" was the first wave. Companies in the sector overcome risk aversion and traditional processes and channels to embrace digital platforms and offer their services online. Insurtechs played a decisive role in this transition, targeting the sector's weaknesses—meeting customer needs in a few clicks and saving them from paper forms, complex bureaucratic procedures, and trips to offices.

The results? Customer experience standards have been raised, and specific improvements in efficiency and sustainability have been achieved. However, there is still potential for growth. It is important to mention that Latin America has experienced several cases where Insurtechs and insurers have successfully gained value from the first wave of Insurtech.

From Protection to Prevention

The second innovation trend emerged in a world where technologies evolve rapidly: "connected insurance." Real-time information on policyholders available through Internet of Things (IoT) devices and sensors allows full customization of the conditions and prices of each service based on the client's behavior or performance situation.

Culturally, this represents a shift from traditional protection models to more prevention-oriented and service-driven models (this framework also supports "pay-per-use" schemes, popular in the new technology world). Meanwhile, there are remaining challenges regarding the privacy of shared customer data.

Companies in the sector should be ready to ride the wave when connected vehicles and smart homes consolidate in Latin America.

Integrating Artificial Intelligence

Despite all the potential room for improvement and growth ahead for digital and connected insurance, the exponential emergence of generative artificial intelligence (Gen AI) globally also impacts this industry.

The third wave is still incipient: "generative insurance." While its potential produces intrigue, surprise, and even excitement, its future success depends on numerous factors: proving that the technology is used ethically and responsibly, ensuring the customer's ability to adapt, and demonstrating tangible benefits.

Generative AI can streamline and simplify the policy screening, presentation, processing, and settlement processes (everything can be done in natural language and with intelligent virtual assistants), optimize pricing, and hyper-personalize proposals according to each client's characteristics.

In conclusion, Latin American insurers face an unprecedented opportunity: harnessing the power and democratization of all these emerging technologies to compete on an equal footing in the global market and deliver products, services, and business models that meet and even anticipate the needs of their customers.