AI in Insurance: Adaptive Questionnaires for Improved Risk Profiling
This work addresses inefficiencies and fraud risks in insurance underwriting for insurers and applicants, representing an incremental improvement through adaptive personalization.
The paper tackled the problem of lengthy, standardized insurance questionnaires by introducing the ARQuest framework, which uses LLMs and alternative data to create adaptive questionnaires, resulting in fewer questions and higher user preference while maintaining competitive risk assessment accuracy.
Insurance application processes often rely on lengthy and standardized questionnaires that struggle to capture individual differences. Moreover, insurers must blindly trust users' responses, increasing the chances of fraud. The ARQuest framework introduces a new approach to underwriting by using Large Language Models (LLMs) and alternative data sources to create personalized and adaptive questionnaires. Techniques such as social media image analysis, geographic data categorization, and Retrieval Augmented Generation (RAG) are used to extract meaningful user insights and guide targeted follow-up questions. A life insurance system integrated into an industry partner mobile app was tested in two experiments. While traditional questionnaires yielded slightly higher accuracy in risk assessment, adaptive versions powered by GPT models required fewer questions and were preferred by users for their more fluid and engaging experience. ARQuest shows great potential to improve user satisfaction and streamline insurance processes. With further development, this approach may exceed traditional methods regarding risk accuracy and help drive innovation in the insurance industry.