Artificial intelligence (AI) has experienced significant growth and business potential in recent years, driven by the availability of big data and powerful computational capabilities. Insurance carriers, like other industries, are investing in AI initiatives, leveraging data lakes, cloud operations, and targeted analytics to unlock value. While insurers have seen tangible results and satisfactory returns on their AI investments, there is still untapped potential. In a comprehensive analysis of insurance companies, none were classified as AI Achievers, indicating a need for greater AI maturity and operationalization in the industry.
Realizing the Benefits and Growth of AI: Insurers have witnessed the positive impact of their current AI initiatives. Research on AI maturity demonstrates that carriers’ share of cost savings generated through AI has more than doubled between 2018 and 2021, with a projected triple increase by 2024. Moreover, the majority of insurance companies expressed satisfaction with the returns on their AI investments, with 52% reporting that the results exceeded their expectations.
The Challenge: Lack of AI Maturity in the Insurance Industry: Despite the progress made, insurance companies have yet to achieve AI maturity. An analysis of 77 insurers revealed that none of them met the criteria for being classified as AI Achievers—companies with a differentiated AI strategy and the ability to operationalize AI effectively. Instead, the majority fell into the AI Experimenter category, indicating a less mature AI strategy and a lack of capability to fully implement and execute AI initiatives.
Driving Towards AI Maturity and Operationalization: To win the race to AI maturity, insurers need to take strategic steps to advance their AI capabilities:
- Develop a Clear AI Strategy: Insurers must define a comprehensive AI strategy aligned with their business objectives and operational requirements. This strategy should consider how AI can enhance underwriting, claims processing, customer experience, and risk management.
- Invest in Data Infrastructure: Building robust data infrastructure, including data lakes and advanced data management systems, is crucial to support AI initiatives. High-quality data is the foundation for accurate and effective AI models.
- Cultivate AI Talent: Attracting and retaining skilled AI professionals is essential for successful implementation. Insurers should invest in training and development programs to upskill their workforce and foster a culture of AI innovation.
- Scale AI Initiatives: Rather than limiting AI to isolated experiments, insurers should focus on scaling successful initiatives across the organization. This involves integrating AI into core business processes and workflows to drive efficiency, accuracy, and improved customer outcomes.
- Embrace Ethical and Transparent AI: As insurers leverage AI, it is essential to prioritize ethical considerations and ensure transparency in decision-making processes. This includes addressing bias, maintaining data privacy, and complying with regulatory guidelines.
Conclusion: While insurance companies have experienced positive outcomes from their AI initiatives, there is still room for growth and maturity. By developing a clear AI strategy, investing in data infrastructure, nurturing AI talent, scaling successful initiatives, and upholding ethical standards, insurers can position themselves as AI Achievers. Achieving AI maturity and operationalization will enable insurers to unlock the full potential of AI, driving innovation, cost savings, and enhanced customer experiences in the evolving landscape of the insurance industry.