Consumer insights reveal how insurers can ‘plant a flag’ with agentic AI

Insurers have an opportunity to make strides in AI adoption thanks to new research that shows when, how, and at what age consumers are most comfortable using the technology.

In its recently released AI Inclination Index, IT services firm Cognizant took a close look at the insurance industry in particular and found that consumers are most comfortable with using AI to learn more about products, and they prefer conversational AI tools.

According to Craig Weber, head of insurance strategy at Cognizant, insurers should understand the technology and have a good grasp on its capabilities to know how best tools like agentic AI can be leveraged.

“I view this as an opportunity to plant a flag with AI,” Weber told InsuranceNewsNet. “There are small subsets of buyers and users of insurance who are willing to entertain the use of AI. So, my best advice to an insurer is to build the skills around AI and plant the flag because this trend is only strengthening over time.”

Comfort varies by lifecycle

The AI Inclination Index measured a consumer’s comfort level with AI at three different stages of the consumer journey:

• Learn — researching certain products
• Buy — making the purchase
• Use — utilizing digital technologies such as smartphone apps

For the insurance industry specifically, the index found most consumers are quite comfortable with using AI for learning or researching products before deciding to purchase. This category scored a high 85 on the index.

“That completely makes sense to me, because it’s the area where consumers are using AI for other things. So, we all have ChatGPT and Grok and other tools on our desktop and on our phones, and we are now getting very used to using them to explore the world around us. So, that finding is pretty consistent with what we see in the insurance world,” Weber said.

However, the comfort level dropped significantly at the buy stage of the journey, dropping down to a score of 53. This indicates consumers may still prefer to buy insurance with an agent rather than using AI.

“When you move to the buy phase of insurance, it ratchets up the tension level between consumers’ willingness to let a machine in on their decision and to share their sensitive data with insurers. And so, we see a pretty significant drop-off in AI inclination in the buy phase,” Weber noted.

The use phase ranked even lower at just 43. However, the survey pointed out that this low score could simply reflect infrequent usage rather than hesitation, as most people don’t really interact with their insurance policies after the purchase unless they need to submit a claim.

Consumer age makes a difference

The study also found consumer preferences vary based on age, as older consumers were generally more comfortable with using AI in the learn and use phases. Younger generations, on the other hand, were more comfortable with using AI for purchases.

Weber cautioned, however, that age preferences should not be taken broadly because it also varies based on the type of insurance product. For instance, he noted that younger consumers “almost universally have less experience with complex products such as investments, life insurance, and annuities, and so the risk profile is much higher.”

“I think, yes, there is a tendency for young consumers to want to use online tools and do things, in some cases, without talking to a human. But, in some cases, they simply don’t have enough experience with those products to know,” he said.

Where does agentic AI fit in for insurers?

Conversational AI is the tool of choice for most consumers when it comes to insurance, according to the Index. This is particularly for the learning phase, and especially because of its ability to provide “personalized, interactive guidance.”

However, Weber suggested there could be a bigger role for agentic AI — which he described as “essentially a concierge that works on your behalf” — to play in the future. He noted that Cognizant has been seeing “a huge leap forward in the ability of agentic AI to mimic human thinking on basic tasks.”

“I think agentic is ideally suited for the needs analysis and product discovery phase,” Weber said. “Your agentic AI agent can understand things about your life, can understand what your needs are, can help you figure out what coverages make the most sense and do this in an intelligent way and then actively go out and find the right products and keep your profile updated as your life changes.”

Where can insurers start?

Weber acknowledged that the insurance industry, in general, is still relatively slow to adopt AI, but argued that whether insurers are “100% comfortable with it or not, they need to be on the AI path.”

He suggested starting with non-customer-facing areas, such as distribution, to minimize risk while adjusting.

“Even though insurance appears to be behind other industries — and there are really good reasons for that — that doesn’t diminish the need for insurers to understand the technology and build the skills and the ecosystem that will leverage the technology,” Weber said.

Cognizant is an IT services company with a strong focus on GenAI. Founded in 1994 and based in Teaneck, NJ, Cognizant provides digital transformation solutions and other business services to insurance companies.

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Rayne Morgan is a journalist, copywriter, and editor with over 10 years' combined experience in digital content and print media. You can reach her at [email protected].