While artificial intelligence (AI) tools have been used in the insurance industry for years in areas like underwriting, claims management and customer service, the introduction of generative AI tools like ChatGPT has made the technology more widely accessible and catalyzed implementation in everyday business.

Yet, only 6% of independent insurance agency principals say their agency has implemented an AI solution, according to the “2024 Agent-Customer Connection Study" by Liberty Mutual and Safeco Insurance. However, usage will likely accelerate in the coming years, according to the survey of 1,133 independent agency leaders, with 1 in 3 agency principals saying they are likely to be using AI in their business in the next five years.

Many agencies are exploring and learning about their options. Twenty percent of agents said they are starting to learn about AI, 27% said they are interested but aren't making it a priority, and 45% said they don't know enough about AI to make business decisions about it, the report said.

In general, attitudes around implementing AI are mixed. While 64% of principals said that they are interested in how AI can improve their business, only 17% said they trust AI technology to safeguard data.

More than one-quarter (27%) view AI as a threat, citing errors & omissions exposure and worrying that it could replace agents. Those concerns are certainly warranted, the study notes, with hallucinations, lack of transparency and data privacy all risks that agencies should protect against. 

As AI technology advances, vendors are increasingly integrating AI into the tools they sell to agents, the report said, adding that agents who take the time to understand the new technology and explore its use will be better positioned to succeed in the future.

“The rapid advancement of artificial intelligence in the insurance industry has brought a mix of excitement and trepidation among insurance agents," said Luke Bills, president, independent agent distribution, Liberty Mutual Insurance. “As this research shows, agents are curious about AI, but don't yet trust the technology. They see the possibilities for AI, but are still figuring out how to actually bring it into their business."

Half of agency principals said AI can make their business more efficient. Additionally, 43% said using AI will help their customers and help grow their business in the future. They listed identifying opportunities for cross-selling, automating routine service tasks and assisting in marketing content creation among the use cases.

The study also surveyed 1,110 insurance consumers and found that independent agencies' customers expect quick and attentive service from their agent. Three-quarters of independent agency customers say it's very valuable or even critical for an agent to be “very responsive" to their requests. Thirty-nine percent of customers said the ability to contact an agent 24/7 would make them more likely to work with one particular agent over another. And 67% said they want their agent to be proactive about knowing their needs. 

However, consumers do not want AI to replace their agent altogether, the report found, with 68% of surveyed consumers saying they prefer to have the advice of an expert to make the best decisions and 70% saying they spend their money with local and small businesses whenever possible.

“Forward-thinking agents see that AI is a tool to enhance—not replace—the vital work they do as trusted advisors," Bills said. “As AI continues to change the way we all work, agents who take the time to strategically integrate AI into their agencies will have an advantage over those who ignore or avoid AI."

AnneMarie McPherson Spears is IA news editor.