Explainable AI in Insurance: What You Need to Know in 2025

Explainable AI means creating computer programs that show clear reasons for their decisions. Instead of just giving an answer, they explain how they got there.

In insurance, this is important because companies use AI to decide things like who gets a policy or a claim paid. Without explainable AI, these decisions can feel like a mystery. Explainable AI adds a layer of trust by making the process transparent for both customers and agents. It helps everyone understand why certain choices were made, which can reduce disputes and improve satisfaction.

Here is what explainable AI offers in insurance:

• Clear decision paths that can be reviewed

• Better compliance with regulations

• Improved risk assessment accuracy

For those who want to dive deeper, explainable AI uses methods like breaking down algorithms step-by-step or highlighting which data points influenced results the most. This way, even complex models become understandable. A practical example is a system that reviews claims and states why it approves or denies one based on clear criteria like accident type or coverage limits.

Strada works alongside explainable AI to make insurance operations more transparent and actionable. While explainable AI helps insurers understand why certain decisions are made, Strada’s Voice AI puts those insights into motion: handling customer calls, capturing details, and triggering real-time workflows.

Together, they create a clear, trustworthy process where decisions are both understandable and instantly acted upon, improving efficiency and confidence across claims and policy servicing.

Here are common techniques explainable AI relies on:

1. Visual explanations showing important data features

2. Rule-based summaries that give straightforward "if-then" logic

3. Interactive tools letting users explore different decision factors

By using these tools, insurance professionals gain a clearer picture of AI-driven decisions, which helps them manage risks better and communicate clearly with clients.