AI Agents in Insurance | Use Cases and Design

AI agents in the insurance industry: from advice and underwriting to claims payment

Insurance is a business whose product is a promise: if something happens, the insurer will be there for you. But many policyholders experience that promise as long queues, repeated paperwork, vague answers and claim files that go silent for weeks. On the other side, insurance company staff work under a heavy load of documents, calls and repetitive checks. AI agents can close this gap: systems that understand the policyholder’s language, connect to the insurer’s core systems, review documents, move the case forward and, wherever a decision is sensitive, hand the work to a human specialist.

This article is the seventh part of our “Agents in industry” series. If you are not familiar with the concept of an agent, first read What is an AI agent? (in Persian). In the previous part we looked at AI agents in online stores (in Persian), and this time we turn to the insurance industry. Below we review agent use cases from selling and issuing policies to claims handling, fraud detection and renewal, explain the technical architecture and compliance requirements, and propose a practical roadmap. If you manage an insurance company, brokerage or agency network, this guide helps you know what to expect from Karzaan’s AI services.

Why is insurance fertile ground for AI agents?

Insurance is one of the most text-heavy industries. Every policy is a set of conditions, obligations and exclusions; every claim file is full of forms, reports, invoices and photos; and every day hundreds of questions arrive from policyholders and agents whose answers are hidden in those same texts. Large language models are strong at exactly this kind of understanding and processing.

On the other hand, most insurance processes are multi-step and pass between several departments and systems. That makes them a good fit for agents, because unlike a simple chatbot an agent can plan a multi-step task, use different tools and track the status of the work over time.

Paper-based, repetitive, high-volume processes

In many insurance companies a large part of the work is still done by hand: a specialist opens scanned documents, re-enters the information into the system, checks whether the file is complete and calls the policyholder about missing documents. These tasks are both time-consuming and error-prone.

An agent can automate much of this: extract information from documents, match it against the policy, list what is missing and immediately ask the policyholder for the missing document. Instead of data entry, the human specialist focuses on review and decisions.

Trust: the policyholder’s main concern

From the customer’s point of view, the biggest issue in insurance is trust. Policyholders worry that when a loss happens, their case will be held up over a small clause in the policy or a missing document. Much of this mistrust comes from a lack of clear, timely information, not necessarily from the insurer behaving badly.

An agent that explains the policy terms in plain language, reports the status of the file at any moment and clearly states the reason for each decision directly affects this trust. To see where AI creates the most value in a business, read Where should we use artificial intelligence? (in Persian).

Mapping agents onto the insurance value chain

The insurance value chain starts with sales and continues to claims payment and renewal. At each link in this chain, a specific agent can play a role:

Companies usually don’t need to build all these agents at once. The logical path is to start with the link that has the most workload and the least decision risk, and then move forward step by step.

The insurance sales and advisory agent

Most people are confused when buying insurance: which cover do I need? What does a deductible mean? How high should the coverage limit be? Agents aren’t always available, and sometimes they recommend the product with the higher commission instead of the one the customer needs. An insurance advisor agent can offer precise, impartial advice that is always available.

Identifying needs and suggesting suitable cover

With a few simple questions the agent clarifies the customer’s need: how old is the car and is it used mostly in the city or on the road? How many people are in the family and what are their medical needs? What field is the business in and what risks does it face? It then suggests suitable cover from the company’s products and explains the reason for each suggestion.

These conversations are valuable for the company too. It learns what needs customers come with and which needs the current product range doesn’t cover, information that is very useful for designing new products.

Explaining terms and exclusions in plain language

Many insurance disputes start because the policyholder didn’t understand the policy’s exclusions when buying it. The agent can explain the most important terms and exclusions with concrete examples; for instance, which kinds of damage are covered by comprehensive car insurance and which are not, or for which services a waiting period applies in health insurance.

This explanation must always be based on the official policy wording and general conditions, and the agent must not promise anything beyond the text. A policyholder who understood the terms correctly from the start feels far less deceived when a loss happens.

Supporting agents and brokers

The agent isn’t only for customers; it can also assist insurance agents and brokers. In a meeting with a customer, an agent can ask it to compare the terms of two products, prepare a rate inquiry or list the documents needed for issuing. This raises the quality of the agent’s advice and reduces issuing errors.

Recording these interactions in CRM software (in Persian) keeps each customer’s complete history, from the first consultation to the latest claim, in one place and helps manage the sales network better.

The issuing and underwriting support agent

Issuing a policy, especially in commercial and engineering lines, requires collecting a lot of information and documents. The underwriter has to read this information, analyze it and decide on acceptance and terms. The issuing agent takes over the preparatory work so the underwriter can spend their time on expert judgment.

For simple individual policies, much of the issuing can be done under defined rules without an underwriter’s involvement. In that case the agent checks the documents, records the information in the system and, if everything is within the rules, prepares the draft policy for issuing. Anything outside these rules, such as an unusual claims history or an unclear document, is referred to the underwriter.

Collecting and checking documents

The agent tells the applicant which documents are needed for the type of policy, reads the documents received, extracts the key information and flags inconsistencies; for example, if the chassis number on the vehicle card doesn’t match the application form or a certificate has expired.

This initial review means the file that reaches the underwriter is complete and clean, and the endless back-and-forth over a missing document disappears.

Helping the underwriter

For large policies, the agent can summarize inspection reports, past claims history and the applicant’s business information, and highlight the key points for risk assessment. With this summary the underwriter reaches the important points faster.

The final decision on accepting the risk, the rate and any special terms must always rest with the human underwriter. The agent only raises the quality and speed of file preparation, and every suggestion it makes must be explainable and reviewable.

The claims reporting and handling agent

The moment of loss is the moment of truth in insurance. At that moment the policyholder is usually worried, angry or hurt, and every delay or complication makes the experience more bitter. Fast, transparent claims handling has the greatest effect on customer satisfaction and loyalty, and this is where an agent can make the biggest difference.

An important point in designing this agent is tone and empathy. Someone who has just had a car accident or has a loved one in hospital has no patience for long forms and bureaucratic sentences. The agent should speak briefly, calmly and clearly, ask only for the information needed at that moment and leave the rest for later. If the conversation shows the matter is urgent and sensitive, such as an injury, the agent must immediately give the policyholder a way to reach a human specialist or emergency assistance.

First notice of loss

The agent can receive a loss notification at any hour of the day or night: through conversation it establishes what happened, where and when, and which policy applies. Then, based on the type of loss, it lists the exact documents required and guides the policyholder on what to do right away; for example, from which angles to photograph the accident scene.

This structured first notice greatly lightens the claims specialist’s work. The file is created from the start with complete, categorized information and is routed to the right specialist.

Reviewing documents, invoices and images

The agent reads the documents sent in: medical invoices, assessor reports, accident sketches, damage photos and payment receipts. It extracts the information, matches it against the policy obligations, flags items outside the cover and prepares a structured summary for the specialist.

For simple, low-risk claims, the company can allow the file to be paid after a quick specialist approval under defined rules. For more complex claims, the agent only does the preparation and the full assessment rests with the specialist. In every case, a decision to reject or reduce a claim must not be made without human review.

Transparent updates on file status

One of the biggest frustrations in claims is not knowing what is happening. At every stage the agent can tell the policyholder where the file is, what it is waiting for and what the next step is. If a document is missing, it says exactly which one and why. If part of the loss isn’t payable, it explains the relevant clause in plain language.

Once the claim is approved, the agent can track the payment process and report the result. Integration with payment systems matters a lot here; an area we covered in Fintech and payment app design (in Persian).

The fraud detection agent

The cost of insurance fraud is ultimately paid by honest policyholders. But fraud detection must not become an excuse for being strict with every customer. The fraud detection agent helps focus detailed review only on files that genuinely show suspicious signs.

The value of this agent is that it lifts the burden of review from all files. When specialists don’t have to examine every file with suspicion, healthy files, which are the majority, are paid faster, and investigation resources concentrate on the truly suspicious cases. In other words, better fraud detection both lowers the company’s costs and improves the experience of honest policyholders.

Spotting suspicious patterns

The agent can find signs that a specialist would miss among hundreds of files: duplicate invoices with different numbers, photos that were already used in another file, claims reported right after the policy was issued, or unusual links between several files that lead to a particular repair shop or medical center.

These signs don’t prove fraud; they only set the priority for review. For each alert the agent must give a specific, checkable reason, not a vague score.

Referral to a human investigator

Suspicious files are referred to the investigation unit with the reasons and evidence. The human investigator decides whether further inquiry is needed. The investigator’s finding is fed back to the agent so false alerts decrease over time.

It is important that no policyholder’s file is held up solely because of an agent’s alert, and that there is a clear appeal process. To learn about the role of technologies such as blockchain in transparency and preventing document forgery, read Blockchain in business (in Persian).

The policyholder service and renewal agent

A large share of contacts with insurance companies are simple questions and requests: what does my policy cover? When is my next installment? How do I change my address? The service agent can answer these requests without waiting, at any hour.

This agent also lightens the load on call centers. On busy days, such as close to the renewal deadline for car policies or after natural disasters, call volumes multiply and long queues make policyholders unhappy. The agent can talk with many policyholders at once and hand only the complex cases to a human operator with a full summary, so the operator doesn’t have to ask the questions all over again.

Answering policy questions

After verifying the policyholder’s identity, the agent reads their policy and answers specific questions: is this medical service covered? How much of the limit is left? What should I do in such-and-such a situation? The answer is based on that person’s own policy, not a general explanation.

The natural home of this service is the policyholder portal and the company’s app. If your company doesn’t yet have an integrated portal, What is an enterprise portal? (in Persian) is a good starting point.

Renewal, endorsements and installments

Before the expiry date, the agent can remind the policyholder to renew, ask about any changes needed and prepare a draft renewal. Endorsement requests, such as changing the car, adding a family member or increasing the limit, can also be logged through the same channel. For installments, the agent sends payment reminders and reports the payment status.

Keeping an existing policyholder is usually far less costly than acquiring a new customer, and timely, hassle-free renewal is one of the most important drivers of loyalty. In designing loyalty and reward systems, including the Parseh discount and loyalty switch, Karzaan has worked closely with this kind of need.

The internal knowledge agent for staff and agents

Insurance companies have a large volume of regulations, circulars, instructions and product terms that change constantly. To answer a simple question, staff and agents sometimes have to search several documents or ask a colleague. The internal knowledge agent solves this problem.

This agent is especially valuable for newcomers. New employees or agents usually take months to learn the details of products and procedures, and during that time they either take up experienced colleagues’ time or answer with errors. An agent that gives the precise answer along with its source makes this period shorter and less error-prone. We described a similar experience for employee onboarding in AI agents in human resources (in Persian).

Searching regulations and circulars

Using retrieval-augmented generation, the agent answers only from valid, up-to-date versions of documents and states in each answer which clause of which document it used. If a new circular has replaced an old one, the agent uses the new one as the basis.

This agent raises the consistency of procedures across the whole network. When all agents and branches get their answers from one source, two policyholders in the same situation are less likely to receive two different answers.

Continuous training for agents and staff

An insurance agency network is large and dispersed, and training it consistently and continuously is a serious challenge. Every new product or legal change needs training. A learning experience platform can personalize this training for each agent based on their line of business and level of knowledge.

Karzaan’s smart LXP is designed for exactly this kind of learning and can also be integrated with the internal knowledge agent. To learn more, read What is an LXP? (in Persian) and AI in corporate training (in Persian).

Agent use cases in different lines of insurance

Each line of insurance has different customers, documents and types of loss, and the agent must be designed for that specific line. We review four widely used lines.

What all lines have in common is that the agent must be trained on the general and specific conditions of that line and know which decisions are sensitive in it. An agent designed for car insurance should not be used for health or engineering insurance without being reconfigured, because the language, documents and risks of each line are different.

Car comprehensive and third-party insurance

This line has the highest volume of files. At the moment of an accident, the agent can guide the policyholder, receive the photos and sketch, schedule the assessor’s inspection and recommend contracted repair centers. At renewal it explains the no-claims discount and any changes needed.

Because of the high volume in this line, even a small saving on each file adds up to a large effect on operating costs and customer satisfaction.

Supplementary health insurance

Supplementary health insurance, especially group contracts for organizations, faces a large number of invoices and questions about cover and limits. The agent can tell the insured organization’s employees which services are covered, how much of the limit is left and which documents are needed, and prepare the invoices for review.

Data in this line is highly sensitive. The agent’s access to medical records must be kept to the minimum possible and used only for that file and that person.

Life and investment insurance

Life insurance is a long-term contract, and the policyholder deals with the company for years. The agent can explain the status of the accumulated fund, the installments paid and the options available, such as a loan or surrender, and answer questions about beneficiaries.

In this line, care must be taken that the agent doesn’t give definitive financial advice. The agent explains the contract terms and leaves important financial decisions to a human advisor. For an overview of digital financial services, see What is fintech? (in Persian).

Liability, engineering and commercial insurance

In commercial insurance, such as employer’s liability, industrial fire or construction project insurance, the volume of technical and contractual documents is very large. The agent can summarize contracts and technical reports, extract key obligations and exclusions, and help the underwriter and claims specialist.

Agents used in heavy industries such as steel and mining (in Persian) can also make safety and incident data available to the insurer; a connection that could in future help assess risk more accurately.

The technical architecture of an insurance agent

An insurance agent is not just a language model. Behind it are layers that ensure its accuracy, security and auditability. An important principle in this architecture is separating “thinking” from “doing”: the language model decides which tool is needed, but the action itself, such as registering a claim or issuing an endorsement, is carried out by the system’s controlled code under defined rules.

Connecting to core insurance and payment systems

The agent needs real data: policies, claim files, installments, the agency network and procedural documents. In many insurance companies this data is kept in old, separate systems. The right approach is to build a secure API layer through which the agent accesses only permitted data.

This layer is effectively part of the company’s enterprise software (in Persian), and its challenges are similar to those we explained in ERP integration (in Persian). Karzaan has experience integrating with financial infrastructure in financial and credit systems, including the Aramis credit card.

Human in the loop and the agent’s level of authority

A specific level of authority must be defined for each of the agent’s actions. Answering questions, first notice of loss and renewal reminders can be automatic. But rejecting a claim, reducing an amount, changing policy obligations or payments above a set cap must always be approved by a human.

All of the agent’s actions must also be recorded in an auditable log. In an industry with a regulator, where disputes may reach adjudication bodies, this precise logging is a requirement, not an option.

Channels: portal, app and messaging

Policyholders contact the company through different channels: the portal, the app, phone calls and messaging apps. The agent must be present on all these channels and keep the conversation history across them. We covered the key points of building an app suited to organizations in Enterprise mobile app design (in Persian).

User experience matters a great deal too, especially at the moment of loss when the policyholder is under pressure. Forms must be simple, sending photos must be easy and the file status must always be visible. Read the principles of this design in Enterprise UI/UX design (in Persian).

Risks, compliance and privacy

Insurance is a regulated industry, and its decisions directly affect people’s lives and assets. Any agent in this industry must be designed from the start with a framework for compliance, privacy and accountability.

Fair, explainable decisions

If the agent plays a role in product recommendations, risk assessment or claims review, it must be possible to explain why it reached its conclusion. Several principles are essential:

• The agent answers only on the basis of the official policy wording and regulations and promises nothing beyond them
• Every alert or suggestion from the agent has a specific, checkable reason
• Decisions that are negative for the policyholder are not made without human review
• The agent’s results are periodically reviewed to detect bias between different groups
• Policyholders know they are talking to an agent and have a way to reach a human

Security of policyholder data

Policyholders’ identity, financial and medical information is among the most sensitive data there is. It must not be sent to external services without control; for many companies, using models that can be deployed on internal infrastructure, or at least masking sensitive data before sending it to the model, is a requirement. Encryption, role-based access control and logging are also inseparable parts of the design.

Agents also face their own security risks; for example, a document whose text contains a hidden instruction meant to trick the agent. For the general principles, see Ways to increase website security (in Persian) and How to prevent your website from being hacked (in Persian).

Implementation roadmap

Implementing an agent in an insurance company should be phased. Before anything else, record the current situation: how many calls and requests you get a day, which topics come up most, what the average claims handling time is and where most complaints come from. This baseline both makes it easier to choose the starting point and later shows what the agent has really changed.

The first use case

For most companies there are two suitable starting points: an internal knowledge agent for staff and agents, or an agent that answers policy questions for policyholders. Both are low-risk, because they make no decisions about acceptance or payment, and their effect shows quickly.

The prerequisite for both is orderly, up-to-date documents: regulations, general and specific product conditions and circulars must be collected, old versions removed and someone made responsible for updating each document.

Pilot, measurement and expansion

The agent is first activated for one line of business or a limited group. At this stage every conversation is reviewed and errors are corrected. Once acceptable quality is reached, the agent is expanded, and in the next step a claims registration and preparation agent is added.

More sensitive agents, such as fraud detection and underwriting support, are built after the data infrastructure and human review process are established. The cost of each phase depends on the project’s needs, the state of the data and the number of systems that must be connected.

How do you measure an insurance agent’s success?

Indicators should be defined before launch so the agent’s real effect can be compared.

Alongside these numbers, regularly reading a sample of conversations and files is essential. Many improvement ideas, both for the agent and for the insurance processes themselves, come out of these reviews.

Conclusion and next steps with Karzaan

AI agents can bring the insurance industry closer to what it promises: fast, transparent and trustworthy support at the moment of need. From impartial advice and plain explanations of terms to instant claims registration, continuous updates, more accurate fraud detection and knowledge support for agents. But their success depends on integrated data, a clear level of authority, human review and serious respect for privacy.

With experience in financial, payment and loyalty systems, enterprise software, learning platforms and AI agents, Karzaan can accompany you from needs analysis to implementation and support. To learn more about Karzaan’s services and see our portfolio, or for a free consultation on an agent for your insurance company, get in touch with the Karzaan team through our contact page.