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 Investments in AI technology companies aimed at disrupting the insurance sector surged by 18 per cent (year-on-year) in 2023, reaching nearly $2 billion through private equity and venture financing globally, a new report showed on Monday.

Insurance providers have integrated AI models with established methodologies from the actuarial sciences to enhance risk analysis and streamline claim processing workflows.

Recent progress in AI, supported by Large Language Models (LLMs) and generative AI, marks a new phase of disruption within the insurance sector, according to the report by leading data and analytics company GlobalData.

"Analysing the startup landscape reveals a significantly broader array of AI-driven applications within the insurance sector. Within the personal and health insurance space itself, a diverse range of solutions are on offer,” said Sourabh Nyalkalkar, Practice Head of Innovation Products at GlobalData.

Tailored solutions are being developed to specifically target various challenges within the industry.

For example, automated damage assessment utilises computer vision and sensor data analysis to swiftly evaluate vehicle and property damage.

“Similarly, treatment expense prediction AI harnesses Natural Language Processing (NLP) to extract valuable insights from diagnoses and reports, facilitating the assessment of health insurance claims,” the report mentioned.

“The evolving landscape of the insurance industry reveals the presence of over a hundred startups actively developing AI-led solutions,” said Nyalkalkar.