Why insurers struggle to measure AI's ROI: PwC

Many financial services organizations still struggle to see the financial benefit of large-scale AI investments, despite more than half focusing their AI workforce efforts on enhancing productivity and activity, according to PwC's AI workforce study.

The survey of over 1,000 financial services executives found that 48% of organizations saw reduced time on routine work from AI usage and 46% integrated AI into day-to-day workflows. But despite great productivity gains, 77% of financial services leaders also say that most AI investments aren't delivering measurable ROI. 

There can be a measurable return from AI, as long as insurers know what to look for, said Katie Klutts-Wysor, partner in PwC's insurance advisory practice.

"The impact should be measured at both the organizational and individual level. Rather than tracking only task automation, insurers should expect improvements in metrics such as premium written or managed per underwriter or account manager, claims handled per adjuster, quote turnaround times, client retention and revenue per employee," Klutts-Wysor explained. "Reimagining the end-to-end service delivery model also preserves clear governance and accountability, with managers retaining ownership of portfolio outcomes — including risk quality, retention, loss ratios and customer experience — even as AI enables each employee to operate at greater scale."

When asked how their organizations measure return on AI investments, 53% of executives saw productivity improvements and capacity creation as the greatest ROI, followed by 50% in AI adoption and usage and 49% in cost savings. Respondents saw the greatest AI-enabled productivity in technology and software engineering, risk management and operations.

Competitive pressure has accelerated AI adoption, and the report notes that lasting value will depend less on deploying AI quickly and more on applying the same financial and operation rigor used for any major technology investment. 

"Insurers are likely to see the greatest value from AI when they redesign how work is performed across an end-to-end process, not simply automate individual tasks. The real opportunity is to reimagine roles, workflows and performance expectations so that employees can manage larger, more complex portfolios while improving quality and the customer experience," Klutts-Wysor said.

The report also notes the importance of planning how AI-powered workflows will be used. Automating repetitive tasks only creates value if employees are redirected toward higher-value work and focusing on building strong client relationships.

"AI-enabled underwriting can allow underwriters to evaluate more submissions, improve risk selection and manage more premium per underwriter by automating data gathering, surfacing insights and accelerating routine decisions. In claims, AI can handle documentation, triage and damage assessment so adjusters can resolve more claims while focusing their expertise on the most complex cases," Klutts-Wysor said. 

"Brokers and account managers can use AI to automatically remarket client programs across the market, identify the most competitive terms and pricing, and continuously collect market intelligence across a broader spectrum of risks," Klutts-Wysor added. "AI can also analyze the cost of risk under different limits, deductibles and coverage structures, benchmark clients against similar organizations and recommend proven risk mitigation strategies — enabling more strategic client advice while allowing each broker or account manager to manage a larger book of business."

PwC suggests that AI adoption is as much a management challenge as it is a technology one. Firms that establish clear performance baselines, define financial targets and hold AI investments accountable for business results will be in a better position than those pursuing AI simply to keep pace with competitors.