Guidewire study reveals customer attitudes to AI in insurance

Guidewire has released its latest annual insurance customer attitudes study, unveiling diverse opinions on the insurance industry and its digital transformation. The report, entitled "The Insurance Engagement Gap and its Impact on Perception and Innovation," highlights key factors affecting customers' views, such as the cost-of-living crisis, technological advancements, and diversity within the industry.

The study reveals that customers' opinions about the insurance industry are significantly influenced by their personal experiences, particularly regarding claims. Four out of ten respondents (40 percent) who have made a claim in the past year reported a positive shift in their perception due to insurers' actions in supporting them. This contrasts with a mere eight percent who had not made a claim but felt similarly positive. This indicates a strong correlation between the claims process and favourable customer opinions.

Despite this, many customers still exhibit a preference for traditional modes of communication. Two-thirds (66 percent) favour phone contact for claims, a 10 percent rise from 2023. Additionally, email remains popular, with 50 percent choosing this method, representing an 11 percent increase compared to the previous year. These numbers escalate among those who have made a claim, with 79 percent preferring phone contact and 56 percent opting for email.

Interestingly, there is a growing interest in usage-based insurance (UBI), driven by customers' desire for flexibility. Nearly half of the respondents (47 percent) cited this as a primary reason for selecting UBI policies; however, only 10 percent currently have such policies, a slight decrease from 2023. Furthermore, embedded insurance options remain relatively underutilised, with 39 percent of respondents comfortable purchasing insurance from non-traditional companies like IKEA, Amazon, or Tesla, echoing last year's figures. However, this comfort level rises to 66 percent among those who have processed a claim through a social media platform.

When it comes to artificial intelligence (AI), customers generally prefer its role to remain supportive rather than decisive. While 32 percent are comfortable with AI assisting in filling out documents and 30 percent with AI helping human call handlers, a significant 49 percent are uncomfortable with AI determining insurance prices without human intervention.

Privacy concerns also loom large as insurers increasingly rely on digital and AI tools. The number of respondents puzzled by insurers' data collection motives rose by six percent year-on-year, with 24 percent expressing such concerns in 2024. However, younger customers, particularly those aged 18 to 24, are more likely to understand the rationale behind data collection, even though nearly half would prefer more discretion.

Regarding employment, nearly half of 18-to-24-year-olds (47 percent) and 41 percent of 25-to-34-year-olds view the insurance sector as innovative and exciting. Additionally, 63 percent of the younger age group regard the industry as diverse, the second-highest rating behind retail.

Decisions on purchasing insurance predominantly rest with individuals, with 49 percent of respondents acting as the sole decision-makers. This figure varies by gender, with 54 percent of men versus 46 percent of women making these decisions independently. Notably, only five percent rely on insurance brokers' advice, although this rises to 13 percent among those who have filed a claim. Brand recognition remains a significant influence in choosing an insurer, cited by 39 percent of respondents.

Will McAllister, SVP and Managing Director, EMEA, Guidewire, remarked, "Our findings underscore the critical need for personalised interactions between customers and insurers. Insurers must engage with policyholders beyond claims and renewals to foster loyalty and improve expense ratios." Michael Cook, Insurance Partner and Guidewire Lead at PwC UK, similarly stressed the importance of technological advancements in overcoming industry challenges and delivering greater benefits to customers.