What's Happening?
American International Group (AIG) is integrating generative artificial intelligence (AI) to create a 'digital twin' of the company. This initiative, led by CEO Peter Zaffino, aims to improve decision-making, client service, and operational efficiency. The digital twin will represent all key data, processes, business logic, and relationships across AIG's businesses and functions. AIG has been developing its ontology, a framework that helps AI understand and leverage data, since it began its AI work. The company has partnered with technology firms such as Palantir, Anthropic, and Amazon Web Services (AWS) to support this endeavor. Initial applications of generative AI have shown promising results, particularly in underwriter assistance for nonprofit business products, with plans to expand across various business lines by 2026.
Why It's Important?
The integration of generative AI into AIG's operations signifies a major shift towards digital transformation in the insurance industry. By creating a digital twin, AIG aims to streamline processes, reduce costs, and enhance service delivery, potentially setting a new standard for efficiency and innovation in the sector. This move could lead to significant improvements in claims processing times and underwriting accuracy, benefiting both the company and its clients. As AIG continues to expand its AI capabilities, it may influence other insurers to adopt similar technologies, driving broader industry changes and increasing competitiveness.
What's Next?
AIG plans to expand the use of generative AI across various lines of business, including commercial insurance in North America by 2026. The company is also exploring AI applications in claims processing, with early tests showing reduced processing times. AIG aims to achieve a core operating return on equity target of 10% plus by 2025 and reduce its expense ratio below 30% by 2027. The company's financial strength ratings have been upgraded, indicating a strong financial position to support these initiatives.
