Artificial intelligence (AI) has been a pioneering technology since the 1950s, but in recent years, its business applications have grown exponentially. Thanks to the proliferation of big data and powerful computational capabilities, AI has found fertile ground to thrive. In the finance sector, including insurance companies, there is a significant investment in data lakes, cloud-based operations optimization, and targeted analytics enabled by AI.
The implementation of AI in the insurance industry has yielded tangible results. Research indicates that the share of cost savings generated through AI by carriers has more than doubled between 2018 and 2021, with projections suggesting a tripling by 2024. The return on investment from AI initiatives has been satisfactory for most insurance companies, with 52% reporting that it exceeded expectations.
Despite the positive outcomes, many insurers are not fully capitalizing on the potential value AI can bring. A study of 77 insurance companies revealed that none of them were classified as AI Achievers, meaning they lacked a refined AI strategy and operationalized approach. The majority fell into the AI Experimenter category, indicating a less mature AI strategy and limited operational capability.
To unlock greater value from AI, insurers can transition into the Achiever category by leveraging AI for enterprise-wide reinvention. This involves integrating AI into decision-making processes across the organization and incorporating AI into various aspects of the business, from optimizing business processes to offering innovative products, services, and customer experiences.
In the front office, insurers can capitalize on AI investments by focusing on enhancing customer experience, developing new products and services, and improving sales and marketing strategies. By harnessing AI technologies, insurers can gain deeper insights into customer behaviors, tailor products to individual needs, and streamline sales and marketing processes for better outcomes.
Additionally, by investing in leadership support, talent development, industrializing AI tools, prioritizing responsible AI usage, and planning long-term AI investments, insurers can position themselves as leaders in AI maturity. By embracing AI innovations and strategic implementation, insurers can maximize the benefits of AI across their operations and drive sustainable growth in the dynamic insurance industry.
