IDC: 40% of Insurers to Use Synthetic Data in AI for Fairness, Compliance by 2027

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• Surya Narayan Saha  Email: susaha@idc.com
• Miguel Carreon  Email: mcarreon@idc.com
• Michael De La Cruz  Email: mdelacruz@idc.com

Top Insurance Predictions in Asia/Pacific* for 2024 and Beyond Revealed by IDC

SINGAPORE, 01 April 2024 – In a recent FutureScape report, IDC FutureScape: Worldwide Insurance 2024 Predictions — Asia/Pacific (Excluding Japan) Implications, due to regulations surrounding artificial intelligence, by 2027, 40% of AI algorithms utilized by insurers throughout the policyholder value chain will utilize synthetic data to guarantee fairness within the system and comply with regulations . This integration of AI spans from underwriting to marketing and claims handling. However, concerns about privacy and bias require insurers to develop guidelines aligning with evolving regulations like the European Union AI Act to ensure compliance, address biases, and enhance transparency.

As per IDC's 2022 AI Strategies Buyer View Survey, around 18% of enterprises are integrating synthetic data, notably in addressing privacy regulations and facilitating secure data exchange in insurance services.

Synthetic data is an emerging solution that mirrors real-world scenarios while protecting privacy. Advances in GenAI enhance accuracy, making it valuable for AI models. Its benefits include privacy preservation, unbiased risk assessments, and cost-effectiveness. These are the AI-driven IDC predictions for 2024 and beyond:

• AI Empowered Sales: By 2027, generative AI (GenAI)-based advisor enablement tools will lead to a 5% spike in distribution sales volume and a 10% boost in sales ROI by delivering personalized and empathetic engagement at scale.

• Outcome Optimization: By 2025, insurtech market consolidation drives outcome-based pricing adoption by 15% of tier 1 and 10% of tier 2 insurers, enhancing value-driven partnerships and efficiency.

• Accelerating Insurer Digitalization: By 2024, 25% of insurers will increase investments in external app development services, positively impacting digital monetization models and increasing the share of digital revenues by 10%.

Insurance enterprises are increasingly integrating GenAI-powered synthetic data to enhance AI accuracy while safeguarding privacy. This aligns with broader trends in AI empowerment in sales and outcome optimization. Insurtech consolidation drives outcome-based pricing adoption, fostering efficiency and partnerships. Meanwhile, insurers are increasing investments in external app development to bolster digitalization and revenue streams.

Various innovations are reshaping the landscape of insurance: embedded payments in property and casualty insurance; collaboration between health insurers and telehealth providers; insurers adopting sovereign public cloud solutions; and auto insurers adopting claims process digital twins:

• Embedded payments: By 2024, embedded payments in property and casualty (P&C) insurance will cut operational costs by 12% and streamline payments collection and reconciliation for policy bounding, renewals, and claims settlement.

• Protection gap: By 2025, bridging the silver economy protection gap will lead 30% of health insurers to collaborate with telehealth providers, offering wider access to personalized and preventative care.

• Sovereign cloud solution: By 2026, as public cloud is given priority for modernizing agent-producer relationship systems, 15% of insurers will adopt sovereign solutions to foster regulatory compliance.

• Auto insurance transformation: By 2029, 30% of auto insurers adopting claims process digital twins will prioritize accident recreation underlying capabilities to reduce 20% of casualty claims adjustment expenses and fraud losses.

A significant transformation is expected in the Asia/Pacific auto insurance market, with insurers planning to increase their investment in trusted data exchange technologies. This strategic move aims to position insurers as preferred partners for Original Equipment Manufacturers (OEMs) in bundling insurance with vehicles. IDC predicts that through trusted data exchanges, by 2028, 40% of auto insurers will spend 10% more on trusted data exchange technologies to become preferred partners of OEMs bundling insurance, increasing auto coverage revenues and IP monetization.

“Across various sectors, AI is revolutionizing processes and driving transformative changes. In the insurance industry, AI adoption is reshaping operations, from enhancing risk assessment with synthetic data to optimizing sales through generative AI-based tools,” says Surya Narayan Saha, Research Manager, Financial Insights, IDC Asia/Pacific.

“Integrating AI with emerging technologies like trusted data exchange and digital twins promises significant advancements, such as improved customer experiences and reduced operational costs. As AI becomes ubiquitous, businesses are leveraging its capabilities to innovate and stay ahead in the competitive landscape,” ends Saha.

Each year, IDC releases its top technology predictions at worldwide, regional and country level through its IDC FutureScape R eports  and gives a crystal ball view of what is ahead for the rapidly changing IT industry. These predictions have been used to shape the strategies and business objectives of technology leaders and business executives in the next 1-5 years. All the predictions stated here cover Asia/Pacific implications.

Catch an on-demand replay of IDC's 2024 Predictions presentation that will be available as part of a series of FutureScape webinars addressing the IT Industry, AI and Automation, Digital Business, CIO Agenda, and Emerging Technologies. If you would like to attend any of these webinars, register and learn more HERE.

Asia/Pacific Japan FutureScape Reports come with a complimentary report that provides specific recommendations for tech vendor sales and marketing leaders. Leverage on IDC insights to better understand clients’ priorities and enhance your storytelling and go to market plans, access the IDC FutureScape: Worldwide Future of Work 2024 Predictions — Asia/Pacific (Excluding Japan) Implications — Positioning for Success — Opportunities for Tech Sales and Marketing Leaders market presentation HERE.

For more information about IDC FutureScape and other resources, please visit our regional FutureScape site. For sales inquiries on the IDC FutureScape framework and reports, please contact your IDC account manager or Tessa Rago at trago@idc.com. For media queries, please contact Michael de la Cruz at mdelacruz@idc.com   or Miguel Carreon mcarreon@idc.com.

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About IDC FutureScape

IDC FutureScape reports are used to shape IT strategy and planning for the enterprise by providing a basic framework for evaluating IT initiatives in terms of their value to business strategy now and in the foreseeable future. IDC's FutureScape reports are comprised of a set of decision imperatives designed to identify a range of pending issues that CIOs and senior technology professionals will confront within a typical five-year business planning cycle.

About IDC

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