As insurers in New Zealand adopt artificial intelligence (AI) to automate claims, streamline underwriting, and personalise products, a key question remains: What happens to the human connection in an industry that often deals with people at their most vulnerable?
Fintrade Securities Corporation Ltd (FSCL) argues that empathy still plays a critical role in insurance, even as technology becomes more central to operations. While AI can increase efficiency and meet rising consumer expectations for speed and convenience, it does not replace the need for compassionate human interaction, particularly when clients face personal loss, medical crises, or natural disasters.
“AI is transforming insurance – and rightly so. In New Zealand, where consumers expect efficiency, transparency, and modern digital experiences, insurers must innovate or risk falling behind,” FSCL said, but it warned against going too far in removing people from the process.
According to FSCL, insurance is distinct from many other industries in that it frequently intersects with major life events. The response clients receive during these moments often shapes their entire perception of an insurer. Automated systems may misinterpret tone, overlook urgency, or issue replies that – while technically accurate – feel impersonal or inappropriate.
For instance, a chatbot acknowledging a death-related claim with a generic “thank you for your submission” could cause distress rather than provide support. FSCL notes that such interactions risk undermining customer trust, especially in a market where fairness and care are deeply valued.
The firm stresses that human staff – whether claims handlers or service agents – bring something essential: the ability to listen, empathise, and respond flexibly. A trained professional may decide to prioritise a payment for a single parent in crisis or adjust protocol for a terminally ill client.
As FSCL pointed out, these decisions go beyond algorithms. They require judgement, compassion, and an understanding of context.
Rather than viewing technology and empathy as opposing forces, FSCL sees them as complementary. AI can handle repetitive, rules-based tasks – like fraud detection, data entry, and policy matching – allowing staff to focus on emotionally charged or complex situations. However, removing human touchpoints altogether could alienate segments of the population, including older customers, those in remote areas, or individuals unfamiliar with digital systems.
FSCL also noted a shift in expectations: as in-person and phone interactions become less frequent, customers place greater importance on the quality of those moments. This places new demands on frontline staff, who must now be trained not only in policy but in emotional intelligence and digital communication. Even written messages or video calls require careful tone and phrasing to avoid misunderstanding.
Some insurers are turning to AI to support this with software that flags potentially insensitive language or recommends softer phrasing in real time. FSCL sees value in these tools but reiterates that they are assistants, not replacements.
Ultimately, FSCL suggests that as insurance products become more standardised, customer experience may emerge as a key differentiator. Companies that retain strong human engagement, while applying AI where appropriate, are better positioned to retain clients, generate referrals, and respond effectively during crises.
“Technology can process data. It can streamline systems. But only a human can sit across the table, look someone in the eye, and say, ‘We’re here for you,’” FSCL said.
