What are the odds that you glance at the first page of the newspaper, and you do not spot AI? Quite slim, isn’t it? In today’s time and age, it’s slowly becoming quite impossible to fathom our lives without AI. Insurance is no different. With AI insurance, reimaging the newer landscape of insurance is becoming much simpler and faster. AI pilots are changing the regular pen-and-paper operations, bridging the gap between the insurer’s trust and convenience. AI alone can unlock a whopping $50 billion to $70 billion of insurance industry revenue. AI pilots are not the trend anymore; it’s part of a larger insurance strategy.  

Taking a closer look at the current AI game 

AI initiatives are becoming part of a faster deployment cycle across insurance organizations. While the AI adoption is fast, every team in an insurance organization is being pushed to investigate the impact of AI and plan its adoption. One such piece of evidence is seen with the underwriting teams. Underwriting teams are rapidly experimenting with document summarization, claims departments are piloting the automation initiatives, IT groups are rapidly evaluating the enterprise AI licenses, and business intelligence teams are deploying the models that help in improving reporting and analytics. 

No ROI without a solid strategy 

The reason for this is that AI experimentation is following the same fragmented path that has essentially been laid down by the legacy insurance systems. The life insurers are able to recognize this, and that too all too well. There are multiple policy administration systems and claims systems, which are stacking up and are accumulating through the sporadic acquisitions, a disconnected strategy followed by bad investments. The key tendency for this is that each of these teams will be able to optimize it for its own department needs, followed by a few initiatives that are connecting across the insurance value chain.  

Today, this AI experimentation risk is repeating the same pattern. Without having a unified architecture, what essentially looks like AI innovation will basically become a new kind of legacy debt. This is exactly where the term “pilot purgatory” comes into the picture. 

The result is huge AI debt 

While the pilot’s purgatory continues to make a much more rapid impact on the insurance industry, there are AI debts that will be the resulting causes of these. Without the right strategic intent to apply AI, experimentation will rapidly increase the costs and accelerate the coordination work without delivering the measurable value. This is exactly where the competition is going up the sleeves.  

In addition to this, the competitors who seamlessly adopt the integrated AI operating models essentially begin to move forward. In addition to this, the pilot purgatory essentially distracts the organization from larger and strategic priorities. This is where AI becomes another additional layer of technical debt, following it to become a driver of change. 

Just adding AI to the process isn’t enough 

The underwriter’s job has essentially always been required to read large volumes of material and extract the relevant details for customizing the risk profile. Today, the AI can truly ingest and summarize this information in just minutes. The result is that there is a significant amount of time to save, and it will truly simplify the underwriting process.  

The key problem here is that most of the insurers are superficially applying AI to their existing workflows instead of holistically reimagining them with the new dimensions that AI can truly unlock.  

What do we think? 

Only adding AI into the process isn’t enough; it’s important to understand the relevance of process driven automation. With AI investment scaling, it’s important to look at the right AI and its application in specific processes to transform AI use to the core operations.