US Insurers Set to More Than Double AI Investment Within 3-5 Years
Insurance companies in the US are preparing to significantly increase their investment in artificial intelligence (AI), aiming to transform key processes such as underwriting. According to a report by Wipro titled "The AI Advantage: Building Tomorrow's Insurance Enterprise", 81% of insurers plan to boost AI spending within the next year. The average AI budget is expected to rise from 8% today to 20% over the next 3 to 5 years.
The report surveyed 100 business leaders from US insurance firms with revenues exceeding USD 500 million, showing a strong industry commitment to adopting AI technologies.
Why AI Matters for Insurers
Nearly all respondents (92%) agree that AI is critical for maintaining a competitive edge, particularly by improving customer experience and personalization. Larger insurers are currently leading AI adoption thanks to better governance and access to extensive data. However, many mid-sized and smaller firms face challenges due to legacy systems and limited AI expertise.
Underwriting: The Primary Focus for AI Implementation
Underwriting is where insurers expect to gain the most benefit from AI. By processing vast amounts of both structured and unstructured data, AI can increase efficiency and accuracy in risk assessment. Though every insurer is working on integrating AI into underwriting, less than half (46%) have fully implemented AI systems in this area.
Looking ahead, 68% of insurers believe AI will improve risk assessment accuracy and reduce costs. Additionally, 65% expect AI to enhance compliance with regulatory requirements, and 62% anticipate improvements in customer satisfaction and retention.
Challenges Slowing Down AI Adoption
- Risk and Compliance: AI introduces risks such as bias and reputational damage. Alarmingly, 21% of insurers—and 44% of smaller firms—lack formal AI usage policies. This gap exposes them to compliance risks as regulations evolve.
- Integration with Legacy Systems: 71% of firms report difficulties integrating AI with existing systems. To address this, 65% are taking a phased approach to rollouts to minimize risks and ease the transition.
- Skill Gaps and Collaboration: Nearly half (47%) of insurers are investing in upskilling their workforce and hiring AI talent. Cross-functional collaboration is also increasing, with 41% of firms reinforcing teamwork between AI specialists and underwriters.
What Insurers Should Focus On Now
AI adoption is becoming essential for staying competitive. Firms that drive enterprise-wide AI integration stand to gain significant advantages, while those slow to adapt risk falling behind. Prioritizing quick wins alongside building a solid foundation in data, governance, and technology is key.
For insurance professionals looking to develop AI skills relevant to their roles, exploring targeted AI courses can be a practical step. Resources like Complete AI Training’s insurance-focused courses offer structured learning paths to build expertise in AI applications for underwriting and risk assessment.
Ultimately, AI is set to become a core part of the insurance business framework, not just an innovation. Getting ahead now involves embracing AI thoughtfully and strategically.
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