Understanding Vertical AI in the Insurance Industry

When a business says it uses artificial intelligence (AI), what exactly do they mean by that? AI is incredibly versatile, and how one business uses AI might be completely different from the next. One difference is if a company is using Vertical AI. Let’s look at what Vertical AI is and how it can help insurance agencies and the entire industry gain a competitive advantage and elevate the customer experience.

What Is Vertical AI?

Vertical AI is industry-specific AI that tailors its abilities to meet unique needs. These AI tools tackle industry challenges and workflows.

We see Vertical AI in more real-world scenarios than we might think. In healthcare, AI-powered medical imaging platforms analyze X-rays, and for human resources, AI tools automate processes like administering Employee Benefits.

For the insurance industry, the rise of Vertical AI means greater automation and optimization. Agencies can leverage AI to streamline more time-consuming tasks and take advantage of tailored technology that fits their business models.

Vertical AI Versus Horizontal AI: Key Differences

Leveraging AI in your workplace can provide a competitive edge, but the type of AI applications used matters.

Generative AI has both Vertical and Horizontal applications. Vertical AI solutions have more of a one-track mind and are highly accurate within their domains. You might hear Vertical AI referred to as domain-specific tools. Domain-specific emphasizes the focus of the solutions to address your unique pain points. Vertical AI has domain expertise, a deep understanding of industry rules, terminology, processes, and higher accuracy.

Vertical AI Examples

Vertical AI streamlines industry-specific processes by providing high-quality solutions to challenges the given industry faces. For example, in the insurance industry, AI solutions can assess damage using image recognition, predict repair costs, and automate payout decisions to speed up the claims process. Others may provide data entry, which involves connecting systems to create quicker workflows. These are tools like HR Copilot or MathGPT, and AI-empowered capabilities embedded into insurance solutions like Applied Epic®, Applied Marketing Automation™, Applied Book Builder™ and Automated Statements.

Horizontal AI Examples

Compared to Vertical AI, Horizontal AI is more for general purposes. Horizontal AI models have a wide range of tasks and abilities, but no industry-specific functions or features. It’s highly versatile, with a wide range of use cases that many industries can take advantage of. Horizontal AI can be applied to various industries, whereas Vertical AI simply wouldn't function for anything other than what it's designed to do. You'll see these tools helping customers make returns or providing research on historical events. These are more general-purpose tools like OpenAI and ChatGPT.

The choice to use domain-specific or general-purpose AI depends on the user's needs and priorities. If you value aspects like precision, efficiency, and expertise, acquiring domain-specific AI is best. If you're looking for a more flexible tool that can adapt to different tasks, then general-purpose AI may be suitable.

Leverage the Vertical AI Advantage

The digital transformation in the insurance industry is changing how everyone does business. Vertical AI is becoming more widely used for efficiency and competitive advantage, from startup agencies to long-established ones. One survey found that 87% of global organizations surveyed believe AI-driven technology will give them a competitive edge over rivals. Agencies will have the advantage of eliminating time spent on manual tasks to focus on identifying substantial pain points to fix and achieve their big-picture goals.

Those who don't seize the opportunity to harness the domain expertise Vertical AI offers risk being left behind. And while Horizontal AI isn't going to slow an agency down, it doesn't match the benefits a tool with industry-specific data would provide.

Implementing Vertical AI in Your Business:

So, how do you get started with Vertical AI solutions? Here are five steps to help you implement Vertical AI into your business.

1. Consider Your Needs

Reflect on your pain points. What solution would best support the growth of your business and make a long-lasting difference? Consider solutions that help with customer service, data entry, or other problem areas. Taking the time to determine why you want to use AI will better support you as you decide what's best for your business.

2. Do Your Research

With your needs known, consider which specific applications would best meet your needs and workplace. One place to start is establishing whether you'd prefer software-as-a-service (SaaS) or app-based solutions. SaaS allows users to access software through the internet without downloading applications. Users subscribe to the solution and access it through their web browser of choice. Similar to Vertical AI, Vertical SaaS is also designed for a particular industry. Reflect on your business model, either existing or future, and consider what type of technology would complement it best.

3. Activate The Technology

With the technology selected, it's time to make it yours. Collaborate with your Vertical AI technology partner to acquire your new solution. Your partner will assist with activating the Vertical AI, whether it's from a SaaS platform or an app-based solution. Consider this your time to fine-tune the solution as well. You can work with your partner to ensure the technology fits your style and has the datasets to provide high-quality industry-specific solutions. Consider adding fine-tuning local language models (LLMs) to support your system and take the time to ensure you and your partner have set up the technology to best fit your needs.

4. Explore Your Technology

Set aside time to become familiar with how your team uses AI solutions. Do you need to dedicate time to training sessions? Are there any issues with integrating the technology into your existing workflows? You might come across some issues if you’ve never implemented AI into your business before. If the process is rushed, errors or uncertainty could cost you and your clients. Lean on your technology provider for support and assistance with AI tech.

5. Review the Best Strategies for Optimization

The implementation process doesn't happen overnight. Be prepared to run diagnostics or change how you use the system to optimize results. Establish strategies to measure and track performance using the platform to identify areas for improvement. Have questions? Reach out to your tech partner’s support team for specific solutions. Vertical AI can make a substantial difference in how your business operates, but first, you must be confident in how to use it.

Challenges and Considerations:

Adopting Vertical AI may not go as smoothly as you hoped. Although Vertical AI platforms are meant to support your business, you might run into some specific challenges.

Here are some challenges you may encounter when adopting Vertical AI systems and strategies to overcome them.

Challenge 1: Responses and workflows are not to the caliber you need.

Solution: Develop high-quality and domain-specific datasets. Consider LLM integrations and techniques to detect data bias. You could be using poor-quality or unstructured data, which doesn’t provide a strong foundation model for the technology.

Challenge 2: The AI model isn't integrating well with your legacy system.

Solution: Invest in cloud-based SaaS solutions. You will then be able to migrate data or applications to cloud platforms to leverage their flexibility for AI. Or develop a custom application programming interface (API) to facilitate better the data exchange between your legacy system and AI technology. It will act as a bridge to support communication between both systems, boosting connectivity.

Challenge 3: Implementing Vertical AI solutions can be expensive, and you worry about the return on investment (ROI).

Solution: Start with pilot projects or small-scale implementation to validate the value the platform will bring to your business. Define clear AI strategies and initiatives that align with the business objects and prioritize supporting tasks with the highest potential for ROI.

Challenge 4: You have ethical concerns over implementing vertical AI.

Solution: Ensure the system provides clear explanations for its decision-making to prioritize transparency and avoid the algorithm developing a bias or releasing private information. Consider establishing data privacy measures through encryption or access controls. Understand that AI doesn’t replace your employees but empowers them to achieve greater work.

Using Vertical AI Together

We can create an even more efficient industry by embracing Vertical AI. Agencies will no longer have to surrender their time to perform manual tasks. They’ll have more time to focus on growth and revenue, and automation will improve the customer experience. Being supported by technology that's industry-specific and tailored to your unique needs will only improve your decision-making processes. Check out our insights to learn more about how Vertical AI fuels the Next Generation of Insurance.