The insurance industry is moving beyond the regular transformative approach and moving towards what is called a platform-driven approach. Many leaders believe that AI in insurance will bring the next big bang transformation, just like the advent of the internet across organizations. However, the reality remains starker than the expectations that are set, which include that 85 percent of the AI projects fail to deliver meaningful business outcomes, as per research conducted by Gartner.  

The market is rapidly shifting while all the chips continue to be in one box—technology adoption. 

The reality that needs to be acknowledged 

At a global level, the shift towards the platform-centric approach is already becoming a regular norm. As per recent Gartner research, the insurance IT spending highlighted the expected projected reach to be $230.7 billion in 2025, growing at nearly 9% annually. However, this rising investment is not always translated into proportional business outcomes. Gartner also highlighted that despite the sustained spending, revenue per employee in insurance has also declined, and only about 29 percent of the insurers have successfully scaled their digital initiatives. 

Moving from fragmentation to orchestration 

Historically, the insurers have focused upon investing in discrete systems that include core insurance function optimization in isolation. While these are the systems that deliver functional improvements, they also often create silos, which limit the enterprise-wide agility. 

A platform-centric model will be redefining the approach, and instead of building or buying any isolated capabilities, the insurers will need to invest in a unified platform that would seamlessly connect to the entire insurance value chain. A McKinsey report reinforces this shift, highlighting that software and data platforms in insurance have been growing approximately 20 percent annually. This is being driven by the demand for connected ecosystems where core insurance operations are seamlessly connected.  

The platform-thinking mindset is the key differentiator 

The value of the platform-centric investment becomes much more evident when it is viewed through performance metrics. For instance, high IT investors are achieving nearly twice the premium growth for low investors, as highlighted by McKinsey.  

These gains are not the result of isolated tools but many of the integrated platforms that seamlessly align with operations, data, and decision-making. With a platform approach, insurers will be able to view technology from a repositioned perspective that includes it being a cost center to a growth driver. Over the last decade, IT’s share of operating costs in insurance has risen significantly, thereby reflecting its central role, which enables the digital products and the services.  

This is exactly why the CIOs are reprioritizing now. 

Why CIOs are re-prioritizing this shift now 

As the industry’s mindset rapidly shifts towards platform-driven technology investment, the CIOs need to view technology investment not just from an implementation but also from an operational perspective. 

For starters, AI implementation in an ecosystem cannot be followed by the regular technology implementation approach. Instead, a broader aspect needs to be taken into account. With AI integration, the age-old rip and replace approach will not work. Instead, tactfully integrating it into the key operational functions will unlock the door to actual impact. 

Additionally, customer expectations are shifting, and the focus is moving towards the digital-first customer journeys. Embedded insurance and real-time servicing are becoming the baseline requirements. Delivering these consistently will require a unified technology backbone, making digital initiatives much more important for the insurers to integrate it seamlessly into the ecosystem. 

What’s ahead? 

For the CIOs, adopting a platform-centric strategy will not just be a technical decision. Instead, it is a leadership mandate which requires alignment across operations, business and technology.  

The opportunity for the CIOs that lie here is to think through while making any kind of technology investment, as the choices that are made today will be favoring the long-term value over short-term gains.