The Economist Group Limited

09/17/2025 | Press release | Distributed by Public on 09/18/2025 08:02

Artificial intelligence is reshaping insurance, but the real transformation lies ahead

Insurance leaders are beginning to see artificial intelligence (AI) move from hype to real-world impact, according to a new report from Economist Impact, sponsored by SAS. While emerging technologies such as generative AI (GenAI) haven't yet transformed the industry, insurers report early wins in productivity and efficiency that may signal bigger changes ahead.

AI has the potential to transform the global insurance sector. For example, it could help make insurance products affordable for the first time for hundreds of millions of people in developing economies. AI systems could also issue early warnings to help communities prepare for extreme weather, then process claims automatically in the aftermath, without long wait times. These insurance-industry use cases already exist in their early forms today, but their full promise is yet to be realised.

Economist Impact's latest report, Underwriting the future: the role of artificial intelligence in insurance, draws on interviews and roundtable discussions with insurance executives globally - in New York, Cologne and Tokyo. It outlines expert perspectives on how AI will reshape the industry, highlighting three key findings:

AI is delivering incremental gains shy of a full-fledged transformation - Insurance executives highlight productivity improvements, providing people with the headspace to focus on creativity and innovation. AI is also helping insurers use real-time data to understand emerging risks such as cyberattacks and climate change, while also lowering administrative costs to make insurance more affordable. Yet these benefits remain limited in scale and uneven across the industry, meaning the pace of progress will shape how much companies invest in the next wave of innovation.

AI creates value, but insurers struggle to capture it - While productivity gains are evident, insurers are uncertain if they will translate into profits. Much depends on whether insurers can cut overheads or generate new revenue streams - and employees need more time to experiment with AI tools to unlock deeper efficiencies. At the same time, much of the value is flowing to other stakeholders: customers benefit from shorter wait times, and technology providers capture additional payments. For now, many insurance executives view AI investments less as a profit driver and more as an insurance policy against falling behind the technology curve.

Organisational agility is essential to address technology, governance and regulatory challenges - Integrating AI into daily operations remains a major hurdle for industry leaders. Insurers need to rethink how data is collected, stored and managed, while addressing risks such as bias, data misuse and confidentiality breaches. AI regulations in the industry are nascent and constantly changing, meaning that monitoring developments and engaging with regulators will be critical to maintaining agility.

"AI is giving insurers new tools to sharpen risk assessment and improve the customer experience, but the business case is still evolving," said Jonathan Birdwell, Global Head of Policy & Insights at Economist Impact. "The industry is in an experimental phase - exploring where efficiencies can be scaled and how insurers can unlock value. The critical question now is whether insurers can move beyond incremental improvements to reimagine core processes and unlock more meaningful returns."

To access the full report, please visit: https://impact.economist.com/new-globalisation/underwriting-the-future-the-role-of-artificial-intelligence-in-insurance
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