AI and insurance CX: consumer trust, challenges, and opportunities in a digital era

It’s hard to overstate the complexities of navigating the modern insurance landscape, and the challenges consumers face in making informed decisions are no exception. In this era of rapid digital transformation, artificial intelligence (AI) has emerged as a promising tool to help simplify insurance processes, from comparing plans to understanding coverage terms. But are consumers ready to trust AI to make such important decisions?

To explore the evolving role of AI in the insurance industry, UserTesting commissioned a global survey of 4,000 adults in the US, Australia, and the UK to gain insights into their experiences, pain points, and perceptions around AI-powered insurance advice.

The survey included insurance users across three countries:

• United States: 2,000 
• Australia: 1,000
• United Kingdom: 1,000

The survey revealed key findings about adopting AI for insurance decision-making, how much consumers trust AI compared to human advisors, and the areas where AI can improve the customer experience.

This report will delve into the significant AI topics emerging from the insurance industry, highlighting the delicate balance between the human touch and AI technology that insurers must strike to earn consumer trust. 

Whether you’re optimizing your digital strategy or exploring the future of AI in insurance, this report offers valuable insights into today’s insurance consumers expectations and preferences when it comes to simplifying their insurance journey.

United States: Is enrolling in insurance becoming too much of a hassle?

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For many Americans, evaluating and shopping for insurance policies has become so stressful that they'd rather face other annoyances in life—like enduring traffic or attending a concert of an artist they dislike. The study surveyed 2,000 U.S. adults to understand the pain points of navigating insurance options and policies in today’s digital landscape.

According to the findings, 58% of US respondents said they'd rather deal with various life inconveniences than face the complexities of insurance. Whether it’s living with their parents again (22%) or listening to only one song repeatedly for an entire year (14%), people clearly feel overwhelmed by insurance.

AI in insurance: Simplifying complexity, gaining trust

While 65% of US consumers reported feeling confident about their insurance coverage, many are turning to artificial intelligence (AI) as a tool to simplify the process. In fact, 36% of respondents have started using AI to help them understand complicated insurance information, with 33% using it to compare plans and 25% relying on it to explain overwhelming coverage terms.

However, the majority, 86%, still prefer to receive advice from human agents rather than AI (14%). Yet, AI is gaining ground in privacy protection, with 43% of consumers trusting AI to safeguard their personal information better than a human. Additionally, 35% of respondents appreciate that AI doesn’t judge them based on their choices or questions.

Consumers weigh the pros and cons of AI

Despite the growing role of AI in insurance, American consumers are still skeptical. More than one-third of respondents (38%) feel less comfortable sharing personal data with AI due to concerns over data security (56%) and the fear of their information being shared without consent (44%).

Consumers note a lack of personal connection (40%) and doubts about the accuracy of AI-driven recommendations (36%) as additional factors fueling their hesitancy. Still, 38% of respondents said they would be open to using AI for insurance advice in the future.

What matters most in choosing insurance

The study also shed light on varying levels of consumers’ knowledge of insurance. While most people felt informed about health insurance (78%) and auto insurance (75%), they were less familiar with home insurance (61%) and pet insurance (39%).

When asked about the most important factors influencing their choice of insurance, respondents overwhelmingly ranked the cost of coverage (69%) as their top priority, followed by potential coverage (61%), customer service (36%), and ease of understanding (34%).

Yet, despite these priorities, consumers still face significant challenges when dealing with their insurance providers. Some of the most common issues include a lack of clarity on coverage details (27%), unnoticed premium increases (24%), complicated claims processes (20%), and poor customer service (19%).

Australia: Embracing AI for insurance advice with caution

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Australians generally feel confident in their understanding of insurance policies, particularly in areas like auto insurance (72%) and health insurance (69%). These high levels of confidence suggest that many Australians are familiar with the more common types of insurance, where they likely encounter straightforward coverage and policies. However, this confidence significantly drops when it comes to less familiar categories, such as pet insurance (36%) and dental insurance (35%). This gap indicates a potential opportunity for insurance providers to improve educational resources and support for these niche areas.

Reluctance to rely on AI for insurance decisions

While Australians may feel secure in their knowledge of certain types of insurance, only 7% of respondents are willing to trust AI to provide insurance advice. Instead, the majority prefer to consult trusted sources, with 52% turning to family members and 38% asking friends for help in navigating their insurance needs. This strong preference for human connections reflects a broader hesitation to rely on AI for critical decisions involving personal finances and risk management.

Privacy concerns are a barrier to AI adoption

A significant hurdle for AI adoption in the Australian insurance sector is the public’s discomfort with sharing personal information with AI platforms. Only 24% of respondents feel more comfortable sharing sensitive data with AI than with human advisors, while nearly half (48%) expressed less comfort. The primary concern revolves around privacy and data security, with 57% of respondents citing these issues as key reasons for their discomfort. Insurance providers looking to integrate AI will need to address these concerns and ensure that their data security protocols and transparency measures are robust enough to build trust with consumers.

Australians show interest in AI’s potential benefits

Despite the caution, Australians are not dismissing AI outright. Many respondents expressed interest in specific AI-driven features, such as tools that compare insurance policies (45%) or explain complex insurance terms in simpler language (37%). These applications of AI align with consumers' desire for more user-friendly, transparent insurance processes. However, only 33% of respondents would trust AI to manage tasks like policy recommendations or claims handling, indicating that while automation and simplification are appreciated, they do not yet fully replace the need for human involvement.

Tailored insurance with AI: a promising future, but human advisors still preferred

Even with privacy and trust concerns, Australians show an openness to AI's potential when it comes to personalization. Seventy-two percent of respondents would consider purchasing a policy if AI could customize it to their specific needs, highlighting the appeal of more personalized insurance offerings. However, when it comes to receiving advice, a staggering 90% of Australians still prefer to hear from human advisors. This suggests that while AI can enhance and streamline certain aspects of the insurance process, the human element remains critical to consumer trust and satisfaction.

The path forward: Balancing innovation with human connection

The future of AI in Australia’s insurance sector will require a careful balance between technological innovation and the personal touch that consumers continue to value. Insurance providers must address privacy and data security concerns while also demonstrating how AI can enhance, rather than replace, human advisory services. By focusing on integrating AI in ways that complement human expertise—such as through policy comparisons and simplified language—insurers may be able to gradually build consumer confidence and drive AI adoption in the industry.

United Kingdom: Cautious approach to AI with a strong preference for human advisors

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In the UK, consumers exhibit a solid understanding of common insurance products, particularly for home insurance (75%) and auto insurance (68%). This high level of familiarity reflects the maturity of the UK insurance market, where these products are widely used and well-established. However, despite this strong foundation of insurance knowledge, the introduction of AI into the decision-making process has yet to gain widespread traction. Many consumers remain uncertain about AI’s capabilities and benefits in relation to insurance.

Low willingness to rely on AI for insurance advice

While British consumers are generally satisfied with the digital tools provided by their insurers—71% report being happy with the apps and websites they use—there remains a distinct hesitation toward consulting AI for advice. Only 9% of respondents would turn to AI for insurance guidance, preferring instead to seek the advice of family (46%) or insurance brokers (33%). This preference for human interaction highlights the skepticism that many in the UK feel toward AI, particularly when it comes to making important financial decisions.

Growing openness to AI in certain areas

Despite the cautious approach to AI, there are signs of growing openness to its potential in specific contexts. Thirty percent of UK respondents feel more comfortable sharing personal information with AI, believing that it could provide greater privacy (46%) and unbiased advice (32%). These respondents view AI as a potential tool for reducing human bias and improving the fairness of insurance processes. However, this openness does not eliminate the widespread concerns about data security, nor does it replace the personal relationships that many British consumers still value when dealing with insurance matters.

AI’s role in simplifying insurance: Policy comparisons and personalization

For UK consumers, the most appealing use of AI in insurance revolves around simplifying and personalizing the process. The ability to compare policies is a key feature, with 39% of respondents expressing interest in AI tools that help them weigh their options. Additionally, 42% of British consumers would be comfortable receiving personalized insurance recommendations from AI, tailored to their lifestyle and specific needs. This indicates a growing recognition of AI's potential to offer more individualized solutions, which could improve customer satisfaction if implemented with the right privacy protections.

Human advisors still preferred despite AI’s appeal

Even with the increasing interest in AI-powered features, human advisors continue to be the preferred source for insurance advice in the UK. A significant 89% of respondents would rather consult a human than rely on AI for insurance decisions. This demonstrates that while British consumers see the potential benefits of AI, especially for personalized recommendations and policy comparisons, they still value the expertise, empathy, and trust that come from human interactions—particularly when navigating complex insurance decisions.

The Future of AI in UK Insurance: Innovation with privacy and personal touch

The findings suggest that while there is growing interest in AI within the UK insurance market, consumers expect these technological advancements to be rolled out carefully, with an emphasis on privacy and personal customer support. For AI adoption to increase, insurers will need to focus on integrating AI in ways that complement, rather than replace, human advisors. By addressing concerns around data security and providing AI tools that enhance transparency and personalization, insurance companies in the UK could gradually foster more optimism and trust in AI-driven solutions.

Survey methodology

Talker Research surveyed 2,000 general-population Americans, 1,000 Australian adults, and 1,000 British adults between August 29 and September 3, 2024. The survey was commissioned by UserTesting and administered and conducted online by Talker Research.