Best’s Special Report: Most insurers expect to leverage AI though data, security challenges may impede fast adoption

Insurers Expect AI Transformation

60%

Percentage of insurers expecting AI to significantly transform their business models within the next one to three years.

Active AI Usage

41%

Percentage of respondents actively using AI across core business areas.

AI Investment Increase

66%

Proportion of insurers planning to increase AI investment in the next 12-24 months.

⦿ Executive Snapshot

What: An AM Best survey reveals that while insurers anticipate significant transformation from AI, challenges hinder its rapid adoption.
Who: Carriers, managing general agents (MGAs), AM Best, Kaitlin Piasecki, Sridhar Manyem, Jason Hopper.
Why it matters: The insurance industry is at a critical juncture where AI could enhance efficiency, but data and integration issues pose substantial barriers to effective implementation.

Nearly 60% of insurers expect AI to significantly transform their business models within the next one to three years.
41% of respondents are actively using AI across core business areas, with nearly 20% at an advanced implementation stage.
Approximately two-thirds of insurers plan to increase AI investment in the next 12-24 months, focusing on productivity and underwriting improvements.

The insurance sector is increasingly recognizing the potential of AI to optimize operations and enhance decision-making processes, marking a shift in technology adoption.
The historical reliance on outdated legacy systems presents a significant challenge for insurers aiming to leverage modern AI solutions effectively.

Immediate implications include competitive advantages for insurers that successfully integrate AI, while those lagging may face operational inefficiencies.
Long-term, the adoption of AI could lead to a transformation in workforce dynamics, with roles evolving towards higher-value tasks as AI handles routine processes.

Regulatory and security challenges related to data privacy and potential breaches from bad actors could impede AI deployment.
Dependencies on legacy systems may hinder organizations from fully realizing the benefits of AI, given the poor data quality and integration issues.

The next 12-24 months will be critical for observing AI investment trends and integration strategies among insurers.
Future developments in data governance and legacy system modernization will be key indicators of successful AI implementation in the insurance industry.