AI-powered insurance shopping already rivalling brokers and telephone enquiries

Over the first half of this year, an increasing number of insurance firms have been trying their hand at the new-fangled idea of artificial intelligence (AI)-led insurance distribution.

In February, for example, Spanish digital insurer Tuio became the first provider to embed an AI-driven home insurance quoting tool into the ChatGPT platform, a move that co-founder and chief executive Juan García said “allows us to convert new customers right at the point of discovery”.

That same month, Experian launched its own auto insurance comparison service to ChatGPT, allowing users to review coverage options and compare estimates across 38 carriers, all with the novel ability to ask follow-up questions in real time.

Then followed a flurry of activity. In April, Aviva launched a home insurance quote generation tool to the AI platform – which it expanded to include life cover in June – followed by Go Compare’s launch of a comparison tool in May and the news that Hiscox was piloting ChatGPT’s advertising programme in June.

All that is to say firms have been increasingly focused on the burgeoning AI-distribution channel and new data from market research firm Consumer Intelligence – provided exclusively to Insurance Times – has for the first time highlighted why.

The data – derived from a monthly survey of several thousand insurance customers, running since 2008 – shows that AI distribution has, within its first half-year of utilisation, already begun to rival some traditional distribution methods.

Catherine Carey, head of marketing at Consumer Intelligence, explained: “Nearly one in five home insurance shoppers are now using AI to shop around, a level that already rivals telephone shopping and brokers, two channels insurers have spent decades building distribution around.

“It’s the single most striking figure in our latest insurance behaviour tracker data and it comes from a channel we’ve only just started measuring.”

Between February and April of this year, price comparison websites (PCWs) continued to dominate as the primary method that consumers utilised when shopping for a new deal, with 94% of survey respondents across both motor and home products reporting that they had used PCWs to look for new cover.

Insurers’ direct websites, utilised by 46% of home and 44% of motor consumers, and insurers’ apps, used by 25% of home and 20% of motor consumers, proved the second and third most common routes.

In the home insurance market, AI tools then proved to be the fourth most common method for searching for new cover, as reported by 19% of surveyees – beating out both brokers (17%) and telephone inquiries (17%). For motor, the rate of adoptions was slightly lower, with AI (15%) placing narrowly behind brokers (17%), but slightly ahead of telephone inquiries (14%).

Carey added that, given the novel nature of the data, the insight into AI distribution should be viewed as a “first indication, rather than a settled baseline” and that the “picture should sharpen as more waves of data come in”.

Sam Marsh, director of product management for UK&I insurance at LexisNexis Risk Solutions, echoed the sentiment, saying that it is “too early to say AI is materially increasing or decreasing switching volumes”.

She added: “What it is changing is how consumers discover, evaluate and research insurance products. Until recently, consumers typically bought insurance directly from an insurer, through a broker or via a price comparison website. AI introduces another route into that process.

“While it can already help consumers understand cover options, the bigger shift will come if AI assistants begin supporting comparison and purchase decisions at scale.

“Through our data and analytics, LexisNexis Risk Solutions can see which customers shop and switch motor insurance. The more interesting question in an AI-enabled world is how the customer journey changes. If AI makes it easier to explore alternatives at renewal, behavioural signals around shopping, switching and retention could become even more valuable.”

Not just a convenience

Consumer Intelligence’s survey data also revealed another interesting trend – consumers report using AI to search for new cover at higher rates when the policy they are looking to switch has a higher premium cost.

Indeed, home insurance customers used AI at the highest rate (64%) when searching for cover in the most expensive bracket – policies above £1,000. Motor insurance customers, meanwhile, saw AI usage peak at 37% in the marginally less expensive £700 to £800 bracket, though still well above the 10% to 20% usage reported for policies less than £500 in annual premium.

Carey explained: “The more interesting wrinkle is that AI usage also scales with how much is at stake financially. Shoppers with premiums between £700 and £1,000 are four to six times more likely to use AI than those paying under £200. Recent claimants – who typically face steeper renewal premiums – also over-index on AI usage versus non-claimants.

“That combination suggests AI shopping isn’t purely a tech-savvy novelty. People appear to reach for it specifically when the financial upside of shopping around more is bigger, treating it as a tool for serious price-hunting, not just convenience.”

As Carey highlighted, while the data on AI shopping behaviour is still limited, early signs suggest that consumers are turning to the technology predominantly when they are highly motivated to find a good deal for a high-priced policy, rather than as a time-saving measure for lower-priced cover.

Furthermore, Marsh added that the uncertainty around the new AI shopping channel only increases the need for insurers to have access to reliable data on shopping, switching and retention – both at portfolio and market levels – to best capitalise on the burgeoning technology.

“Firms absolutely need to be preparing for this growing distribution method or risk not being considered by the AI assistant and, therefore, by the consumer,” she concluded.

“As distribution channels evolve, understanding customer behaviour across the market, not just within a single portfolio, becomes increasingly important.”