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By Roxanne Libatique
Australians are increasingly using artificial intelligence tools for financial and life insurance guidance, turning to programs such as chatbots and generative AI when seeking information about cover and related financial decisions.
Research commissioned by the Council of Australian Life Insurers (CALI) indicates that a majority of Australians are willing to trust financial advice delivered by AI programs, including tools such as ChatGPT. According to the findings, three in five respondents said they would rely on AI-generated financial advice when making money-related decisions. CALI chief executive Christine Cupitt said this trend goes beyond using generative AI for basic tasks. “This isn’t just asking AI to draft an email or fix some grammar. This is real life. We can’t leave Australians with no other option but to put their financial future in the hands of an AI chatbot,” Cupitt said.
Over the past three months, more than one in five Australians surveyed had considered using AI to obtain life insurance advice, a proportion similar to those who thought about contacting a life insurer directly. Almost 20% reported that they had actually received life insurance advice from AI programs during that period. Cupitt said that when professional advice is costly or difficult to access, consumers are more inclined to seek information from informal digital sources. “Without the right kind of advice from the right people, Australians are at greater risk of falling victim to scams and dodgy providers,” Cupitt said. The research also suggests that more than half of Australians would be more likely to seek professional advice on life insurance if it were easier to obtain and involved lower costs.
The growing use of AI for guidance is occurring while the federal government has yet to pass the second tranche of its Delivering Better Financial Outcomes (DBFO) reforms. The proposed tranche two changes would allow life insurers to provide simple advice directly to consumers, at no additional charge, when customers request assistance. CALI and other industry participants argue that the delay is contributing to an advice gap, particularly for straightforward questions that do not require comprehensive financial planning. “Australians want and need advice that is simple, accessible, and affordable. They shouldn’t have to turn to AI to get it,” Cupitt said.
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Concern has intensified following the collapse of First Guardian and Shield Master Fund, which eliminated the superannuation savings of thousands of investors and renewed debate about access to regulated financial advice. “We have seen firsthand what happens when people don’t have access to professional financial advice. They are left with no one to talk to, and in the worst of cases, with no financial safety net to lean on when they need it most,” Cupitt said.
Regulatory data indicates that younger Australians are prominent users of AI in financial decision-making. New figures from the Australian Securities and Investments Commission (ASIC) show that one in five members of Generation Z is using AI to help make decisions about their financial future. ASIC has observed that these consumers actively seek reliable financial information but do not always find it through regulated channels. The regulator said Gen Zs have “a strong appetite for reputable and trustworthy financial content, many struggle to find it – and their search often leads them to sources designed for engagement rather than accuracy.” This pattern raises questions about how to guide younger consumers toward regulated advice, and how AI-based tools should be positioned within existing advice and distribution models.
International research suggests that developments in Australia reflect broader global trends around AI, trust, and insurance. GlobalData’s 2024 Emerging Trends Insurance Consumer Survey found that 73.8% of global consumers believe AI can reduce wait times to speak with insurance agents. A slightly smaller proportion, 71.5%, agreed that AI can deliver operational efficiencies, while 71.2% said the technology is better at pattern recognition than humans. At the same time, many consumers expressed reservations about deploying AI at scale in retail insurance, including concerns about the maturity of current tools and how automated decisions are made in areas such as claims and underwriting.
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“Despite the positive perceptions, insurers face challenges in ensuring consumers adopt AI tools. Many consumers find that the technology is not yet sufficiently developed to be adopted at scale, eroding their trust. To overcome these trust issues, insurers must prioritise transparency in AI-driven decisions, particularly among those who perceive bias in the tools, such as providing negative claim outcomes. Some consumers will have data privacy concerns, while others will simply just prefer interacting with a human,” Beatriz Benito, lead insurance analyst at GlobalData, said.
GlobalData’s survey indicates a difference between general scepticism and the experiences of people who have actually used AI-based services. Among customers who interacted with insurance chatbots, 74.5% reported being satisfied or very satisfied with the experience. Benito said AI is being deployed across functions such as customer support, claims handling, pricing, and fraud detection. Round-the-clock digital assistance and automated claims assessment are areas where insurers are applying AI to change service and processing models.
“Most certainly, the use of AI will transform the insurance industry in several ways and will also drive operational efficiencies and cost reductions. For instance, the availability of AI tools brings a new paradigm in that assistance or customer support can be provided 24/7, while the automation of claims processing leading to reduced settlement times, will naturally be viewed favourably by consumers,” Benito said. She added that, despite these developments, person-to-person contact continues to play an important role in insurance interactions. “While all in all, AI has the potential of considerably improving satisfaction rates in insurance, the need for the human touch, and empathy in engagements continue to limit its full potential. Better communication surrounding AI’s capabilities and nuances will ultimately lead to improved adoption rates,” she said.
The combination of rising consumer use of unregulated AI tools, delayed DBFO reforms, and evolving international attitudes toward AI presents a series of issues to address. Consumers are already using AI for guidance on life insurance, superannuation, and other financial decisions, often outside regulated advice frameworks. At the same time, research in Australia and overseas points to the continued importance of transparency, accessible regulated advice channels, and human support in maintaining long-term trust.
Insurers may need to calibrate investment in AI-driven capabilities with clear explanations of how those tools operate, while policymakers consider whether expanded low-cost advice options could reduce reliance on informal digital sources. The eventual shape of tranche two of the DBFO reforms, and how AI-enabled services are treated within advice and distribution rules, is likely to influence how the Australian insurance market incorporates AI in the coming years.
