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

TL;DR

This paper presents four case studies demonstrating how generative AI can enhance actuarial tasks, including claim prediction, report analysis, image classification, and code migration, while discussing associated challenges.

Contribution

It introduces novel applications of GenAI in actuarial science through practical case studies and discusses key challenges for deployment in regulated environments.

Findings

LLMs improve claim cost prediction from unstructured text

Retrieval-Augmented Generation automates market comparisons

Vision-enabled LLMs classify car damage and extract info from images

Abstract

This article explores the potential of generative AI (GenAI) to support actuarial practice through four implemented case studies. It situates these case studies within the broader evolution of artificial intelligence in actuarial science, from early neural networks and machine learning to modern transformer-based GenAI systems. The first case study illustrates how large language models (LLMs) can improve claim cost prediction by extracting informative features from unstructured text for use in the underlying supervised learning task. The second case study demonstrates the automation of market comparisons using Retrieval-Augmented Generation to identify, extract, and structure relevant information from insurers' annual reports. The third case study highlights the capabilities of fine-tuned vision-enabled LLMs in classifying car damage types and extracting contextual information from images. The fourth case study presents a multi-agent system that autonomously migrates actuarial legacy code from R to Python and validates the translation against the original code's outputs. In addition to these case studies, we outline further GenAI applications in the insurance industry. Finally, we discuss the regulatory, security, dual-use and fraud, reproducibility, privacy, governance, and organisational challenges associated with deploying GenAI in regulated insurance environments.