What are the whys behind AI adoption in insurance firms?

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Artificial intelligence is booming in the insurance industry, as firms seek to modernize customer experiences and equip agents with more versatile tools for assessments. New data from Digital Insurance finds that adoption is expected to grow in leaps and bounds for 2025.

The Cost of AI survey polled 694 experts across the accounting, wealth management, banking and payments, insurance and mortgage fields to learn more about how each sector sees AI adoption progressing between now and the next 12-18 months. Top findings range from roughly half of those surveyed reporting a positive return on AI investments for employee efficiency, to more than 70% that said they have at least moderate knowledge or involvement in their organization's AI initiatives.

More than half of insurance respondents said their firms were using AI in some capacity, with 23% exploring AI use cases through pilot projects, 19% deploying AI in specific tasks or functions and 14% integrating AI across the organization.

Experts like Sam Rea, chief technology officer for Aspire General Insurance, told DI that AI in the world of non-standard auto insurance shouldn't just be seen as a "futuristic technology," but rather an "operational necessity" to avoid the pitfalls of slow, painstaking processes.

"Carriers serve a wide variety of customers [from] drivers who often don't have perfect records or may be price sensitive [to the] many [that] have never had a claim before," Rea said. "Many want their insurance experience to feel as easy as any other digital service they use. AI allows carriers to meet those expectations while simultaneously improving how they manage risk, detect fraud and ultimately deliver better outcomes for everyone involved."

Read more: Insurers must manage governance and bias to comply with AI regulation, experts say

Others like Anupam Gupta, chief product officer of the global insurtech firm Applied Systems, furthered the sentiment relative to the commercial lines sector in saying opportunities for growth through AI use include market placement optimization, advertising content creation, improved customer service and more.

"Fueled by evolving market conditions and advancements in technology, including artificial intelligence (AI), commercial lines are becoming more accessible and potentially more profitable for agencies of all sizes," Gupta said.

Below are further findings from the survey.