Advanced Applications of Generative AI in Actuarial Science: Case Studies Beyond ChatGPT

Executive Summary

This article demonstrates the transformative impact of Generative AI (GenAI) on actuarial science, illustrated by four implemented case studies. It begins with a historical overview of AI, tracing its evolution from early neural networks to modern GenAI technologies. The first case study shows how Large Language Models (LLMs) improve claims cost prediction by deriving significant features from unstructured textual data, significantly reducing prediction errors in the underlying machine learning task. In the second case study, we explore the automation of market comparisons using the GenAI concept of Retrieval-Augmented Generation to identify and process relevant information from documents. A third case study highlights the capabilities of fine-tuned vision-enabled LLMs in classifying car damage types and extracting contextual information. The fourth case study presents a multi-agent system that autonomously analyzes data from a given dataset and generates a corresponding report detailing the key findings. In addition to these case studies, we outline further potential applications of GenAI in the insurance industry, such as the automation of claims processing and fraud detection, and the verification of document compliance with internal or external policies. Finally, we discuss challenges and considerations associated with the use of GenAI, covering regulatory issues, ethical concerns, and technical limitations, among others.