Will the new ChatGPT revolutionize insurtech?

It has been all the talk in the ecosystem of innovators lately: OpenAi's ChatGPT is the most interesting phenomenon in recent months considering its potentially revolutionary effects in the artificial intelligence market. GPT stands for Generative Pretrained Transformer, a very powerful and versatile natural language processing (or NLP) tool that uses machine learning algorithms to generate human-like responses within speech. It was created by OpenAi -a nonprofit research and development organization established to "ensure that general artificial intelligence benefits all of humanity"- with the goal of facilitating the way we interact with machines in a wide range of applications, from customer service to language translation to creative writing.

The new ChatGPT makes use of the GPT-3 model, released by OpenAi in 2020, a type of language based on deep learning to produce human-like texts and handle various tasks, such as answering questions and machine translation.

ChatGPT knows how to answer questions and have conversations much better than the traditional (and often disappointing) chatbots that companies have already been using for years. This new tool is able to understand the nuances of human language by leveraging machine learning algorithms, which are trained on vast amounts of data, to learn from conversations.

The results seen in this first phase are stunning, significantly better than what we have been used to so far. ChatGPT starts with verbal instructions (a sentence, a question) and can create text, strings of software code, images or even video, processing personalized, meaningful and articulate responses.

This is an innovation that is still being perfected and will be usable in so many areas: for example, in corporate customer service, advanced translations, creative writing, virtual assistants, artistic creations, drawing and training on immense datasets, establishing recurrences, finding similarities, building statistics of the most frequent combinations.​

According to a study by the European Insurance and Occupational pensions Authority (Eiopa) tools such as artificial intelligence or machine learning (ML) are already being used by 31 percent of insurance companies, while another 24 percent are at a proof-of-concept stage in their use of these IT systems. Market participants have invested substantial sums in the development of computerized activities and businesses. The development of the insurtech sector is also evidenced by the steady growth of investments worldwide, which increased from $2.6 billion in 2018 to $6.8 billion in 2019, according to the Italian Insurtech Association.

If we wanted to imagine a not-too-distant scenario, insurance companies could optimize the use of artificial intelligence in advice, assistance and selection of insurance products, premium customization, claims management and fraud prevention. Indeed, the future of machine learning for fraud detection in the insurtech sector looks very promising. With the continued development of sophisticated algorithms and the increasing availability of data, insurance companies are increasingly equipped to detect and prevent fraudulent claims.

The benefits in using AI are many, and it is not science fiction to think that the evolution of ChatGPT could achieve greater efficiency, reduced costs, and reduced operational risks.​