LOMBARD INTERNATIONAL ASSURANCE – The EQ and AI equation: Balancing human touch and innovation to advance the life insurance sector

Article rédigé par Lombard International Assurance dans le cadre de leur sponsoring de l’ACA Innovation Award 2024 dont le contenu engage exclusivement son auteur.

« But while AI offers incredible opportunities, it is the human touch, driven by emotional intelligence, that will continue to truly build trust and lasting relationships. »

Florent Albert, Managing Director Europe, Lombard International Assurance

Imagine this scenario: a High-Net-Worth (HNW) client is looking to invest several million euros in a life insurance policy. This decision is crucial, affecting their future financial and succession planning and the legacy they will leave behind. Personalised attention, thoughtful advice, and a nuanced understanding of their needs are essential expectations for them. But as they go online to the website of their preferred insurance provider, they are greeted by a chatbot. Their immediate reaction would likely be a mix of frustration and disbelief. This scenario, while illustrative, highlights a critical question facing the life insurance sector today: What role can Artificial Intelligence (AI) based tools really play in sectors with high-stakes, deeply personal financial decisions?

Traditionally, in the life insurance industry, optimising partner and client relations is not just about efficiency and personalisation; it is also about building trust, ensuring secure transactions and delivering service excellence.

As the industry evolves, companies must navigate the delicate balance between leveraging cutting-edge technology, like AI, to improve service delivery while maintaining the empathy and human connection that clients and their advisers value — especially when making critical financial decisions. While AI offers immense potential to innovate, the essence of life insurance — built on trust and empathy — cannot be lost. A balanced approach that integrates both Emotional Intelligence (EQ) and Artificial Intelligence (AI) is crucial for meaningful innovation in our sector.

EQ is central in life insurance, as we deal with sensitive topics like mortality, appointed beneficiaries, financial security, and legacy planning, requiring a deep understanding of clients’ background and emotional state.

Historically, life insurance professionals have relied on EQ to build relationships, provide reassurance, and offer tailored advice. Clients often share personal and sensitive information, expecting a response that acknowledges their unique life circumstances. For example, when a client discusses concerns about protecting their family business, leaving a financial safety net for their family or the need for a coverage for critical illnesses, an empathetic response provides much-needed comfort and clarity. Such interactions are not just about selling a policy; they are about understanding and addressing the client’s deeper concerns and aspirations.

On the other hand, AI is already transforming various industries, including life insurance. Its many capabilities include machine-learning, reasoning, problem-solving, and adapting to new inputs.

Virtual assistants like Siri and Alexa help us manage tasks, while recommendation algorithms on Netflix and Spotify create personalised content. And we like them, don’t we? They are not distant, theoretical applications but everyday conveniences that many of us take for granted. Coming back to life insurance, AI-enabled tools already analyse vast amounts of data to help determine a client’s risk appetite, examine their profile as part of a thorough KYC due diligence, avoid errors from repetitive tasks and streamline processes.

But that’s not all. AI can automate routine tasks such as processing applications, underwriting, and claims management, reducing turnaround times, improving operational efficiency and freeing up human agents to focus on building relationships. This can lead to faster policy issuance and claim settlement, enhancing client and employee satisfaction at the same time. In addition, with a constantly evolving regulatory framework, AI-driven analytics improve risk assessment, compliance and fraud detection.

Another topical example relates to ongoing client file’s reviews and subsequent remediation, an industry-wide initiative to comply with enhanced Know Your Client (KYC) requirements set by the Luxembourg regulator, the Commissariat aux Assurances (CAA). This review will help update and complete missing client information or documentation necessary to meet due diligence obligations and ensure continued quality service. In this particular example, AI can effectively support sales and compliance teams’ efforts to ensure a seamless process and maximise automated data treatment.  

However, and despite its many benefits, AI must be carefully managed. The scenario of a HNW client encountering a chatbot illustrates a critical risk: relying too heavily on AI can lead to a loss of human touch, making interactions feel impersonal and transactional. In life insurance, where decisions are deeply personal and often involve sensitive discussions, this could undermine trust and satisfaction.

Customers may become suspicious if they feel their data is being used without their consent or if AI-driven decisions lack transparency. They need to feel that their privacy is respected and that they are in control of their personal information. Moreover, ethical concerns must be addressed. AI systems, if not carefully designed and monitored, can generate and increase biases, and lead to unfair treatment and discriminatory practices.

Life insurance companies must prioritise meaningful innovation, combining the best of AI and EQ, to not only thrive but set new standards for the industry. By continuously engaging with clients, technology developers, and industry leaders, insurers can be confident that innovation meets real needs, enhancing clients’ and partners’ satisfaction.

But while AI offers incredible opportunities, it is the human touch, driven by emotional intelligence, that will continue to truly build trust and lasting relationships.