Leading insurance industry transformation with GenAI

Generative AI: CEO innovation in the insurance industry

The insurance industry has undergone significant transformation across its business operations in recent years. Traditional insurance business models have faced disruptive innovation, increased competition from agile InsurTechs and tech leaders offering insurance as a service, and changing customer expectations. Navigating these challenges while pursuing growth has been a key concern for insurance CEOs. To steer organizations successfully through this opportunity, while optimizing long-term shareholder value, CEOs have progressively focused on leveraging innovation in the insurance industry enabled by next-gen tech such as generative artificial intelligence (GenAI). 

GenAI is at the forefront of CEOs’ enterprise innovation agenda, and rightly so. GenAI is no longer just hype in the market but a value-driven reality for CEOs and their enterprises. In our recent Fortune/Deloitte CEO Survey, 79% of CEOs we surveyed said that GenAI will change their businesses within three years. More insight from our study shows how CEOs are focusing on GenAI: 38% of those surveyed said that their companies are trying out GenAI, while 34% reported limited use in production. Figure 1 shows how other stakeholders, such as shareholders, board members, and employees, also recognized the value of Generative AI.

Figure 1: Improvements CEOs expect from Generative AI

The results of our survey reinforce the idea that GenAI is more than a “nice to have” for insurers; it’s a “must have” capability required for incumbent players to catalyze transformation efforts across the enterprise. It will introduce transformative capabilities to the industry, offering innovative solutions across the insurance value chain—from customer service, sales, and marketing at the front end to underwriting and claims processing at the back end. These value-driven opportunity areas will have a significant and tangible impact on insurers’ bottom line, from growth to cost savings. 

Insurance CEOs can realize this value by taking targeted steps toward activation and scaling. Having a clear vision and strategy, setting up mature operating and governance models, and acquiring/developing the right talent at the right time will be key steps on their journey. To make the transformation possible, CEOs have a unique opportunity to meet this innovation mandate by fusing GenAI into their overall business strategy and activating required cultural shifts.

How GenAI can generate bottom-line value

GenAI can create value for insurers in three ways: increasing profitable growth, achieving cost savings and efficiency, and improving operational intelligence and effectiveness. More information on these growth areas can be found in our recent white paper on the topic titled “Implications of generative AI for insurance.” Moreover, our recent CEO survey confirmed the above value-creation perspectives by CEOs: 91% of respondents said they expect GenAI to enhance their organizations’ productivity with an estimated cost savings of 40% to 60% expected3—mainly coming from productivity improvements in customer service. These benefits can be achieved through key value-driven applications of GenAI for insurers.

What insurance CEOs should understand about the impacts of GenAI

In navigating the evolving landscape of GenAI, insurance CEOs are tasked with a strategic imperative to assess its impact across the enterprise in three key areas: technology and security, operating models, and talent.

Technology and security

GenAI’s exponential growth in the market has forced organizations to assess the gaps in their current technology and security landscape to make the organization AI-ready. Key technology enablement considerations span from overall organizational readiness (understanding and evaluating the existing infrastructure, data capabilities, and level of AI expertise within the organization will be imperative to understand) to strategic build vs. buy decisions (GenAI solutions and models have varying levels of customizability, which underscore the need to evaluate build vs. buy).

Operating model

While AI builds on existing data and analytics, it introduces new capability needs that will inform an evolving operating model. Operating model capability maturation requirements will need to be addressed, and CEOs will have a key role in helping lead their executive teams on this effort. To unlock the full value of AI, matured capabilities and well-coordinated risk and governance models will be imperative.

Talent and skill

GenAI will affect how work is organized and what skills are needed to enable desired outcomes. Specifically, CEOs have a unique opportunity to help their organizations understand that GenAI is not a job replacer; rather, it will affect the tasks and skills insurance organizations use to get the job done. CEOs will be uniquely positioned to help their organizations support human and Gen AI teams across the enterprise and unlock the value of their talent.

Innovation in the insurance industry

As insurers stand at the precipice of a transformative era shaped by GenAI, they need to act now to succeed in it. CEOs have a pivotal role in adopting advanced technologies, creating a culture of continuous learning, and adjusting operational models. By making Gen AI a core part of their innovation strategy, insurance CEOs can become leaders in the evolving insurance innovation landscape. CEOs will need to make determined choices, act quickly but purposefully, and invest wisely to keep a competitive advantage in the market.

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