Study finds insurers using AI see a positive ROI

Takeaways:

• 82% of the insurance companies implementing AI are also incorporating Gen AI
• 56% of the respondents have launched pilot programs
• 47% of brokers are still collecting information on AI

Artificial intelligence (AI) is seeing adoption across the insurance industry and the pace of integration frequently depends on the type of organization involved. Earlier this year, Digital Insurance's parent company conducted research across five industries (insurance, banking/payments, accounting, mortgage and wealth management) to gain a better understanding of adoption rates, goals, actual outcomes and budget plans for the coming year.

For the insurance sector, participants included P&C carriers (30%), health insurance payers (24%), multi-line carriers (15%), agents and brokers (13%), life insurance carriers (10%), commercial lines carriers (6%), reinsurers (1%) and other (1%).

Insurers focusing on AI pilot programs

Within the insurance industry, 56% of respondents said their organizations will be implementing at least small pilot AI programs over the next 12 to 18 months. Another 33% indicated that they are still collecting information about AI and have not yet formulated a plan for adoption or testing, while 23% are taking an incremental approach to adopting AI. Nineteen percent of the respondents are utilizing AI for specific tasks or functions, and 14% are taking an aggressive approach and implementing AI initiatives enterprise wide. Their primary reasons for integrating AI include increasing operational efficiency (64%), automation of their processes or workflows (51%), improving employee productivity (48%), enhancing customer experience (44%) and reducing costs (27%).

While insurers are actively incorporating AI into their processes over the next 12-18 months, agents and brokers report a slower pace of adoption with 47% indicating that they are still collecting information about AI, 35% are focusing on small-scale implementations, and only 12% are aggressively rolling out AI initiatives.

Tracking ROI on AI usage

The addition of AI into any company requires a significant investment and 84% of the companies implementing it are seeing a positive return on investment at least part of the time, with 36% seeing them most of the time and 45% seeing them some of the time.

Financing the modernization of their systems to enable the integration of AI is one of the more common challenges all of these organizations face. The respondents in the study identified multiple challenges to their efforts to see a positive return on their investment in AI:

Artificial intelligence has continued to evolve and 82% of the insurance companies implementing AI are also incorporating Generative AI, which is the highest rate among all five of the industries surveyed. Insurers are investing 15% of their budgets on AI technologies and approximately 20% on Gen AI.