Reimagining insurance with AI: From hype to high-impact transformation

As AI reshapes the world around us, headlines promise breakthroughs, boardrooms debate risks and opportunities, and clients are eager to understand what it all means for their business. The conversation is constant, and often overwhelming. With new terms and technologies emerging faster than ever, it can be difficult to distinguish what’s truly transformative from what’s simply creating buzz.

With so much noise, how do we separate hype and myth from reality? Here’s a brief look at what we’re seeing across the global insurance industry and what it means for the future.

Today’s insurance landscape and its AI-driven transformation

Our 2025 Voice of Our Clients (VOC) research confirms that digital acceleration remains the leading global macro trend across the insurance sector. Executives view digitalization and modernization as key drivers of value, customer experience, and operational efficiency. This belief is reflected in rising investments in digital and AI-driven strategies.

AI use cases are emerging across the entire business value chain, from customer service and operations to IT and technology functions.

Our VOC research shows that 46% of insurance executives are confident their digital strategies will deliver the expected outcomes, underscored by accelerating investment in digital initiatives. However, only 43% of organizations currently have an enterprise-wide, comprehensive AI strategy in place, highlighting a gap between ambition and readiness.

The hidden obstacles: Legacy systems, data quality, and disconnected AI initiatives

Many organizations are still prioritizing tactical, point solutions over building comprehensive AI strategies. While several factors contribute to this, two stand out: challenges in modernizing legacy systems and an inability to access and leverage quality data. Both are key concerns for unlocking the value of modern, cloud-based technology and data platforms.

In addition, many companies are testing multiple AI use cases simultaneously to demonstrate quick wins. However, they often underestimate the organizational and cultural impact required for success and fail to embed these initiatives within the broader transformation agenda. This fragmented approach rarely delivers the expected outcomes and can even create early AI fatigue across the organization.

Overcoming three myths holding back your AI strategy

Based on our experience supporting clients in shaping and executing their AI agendas, we’ve found that organizations need to dispel three common AI myths:

1. We need a single source of truth.
A trustworthy single source of truth is difficult for any organization to create and maintain, even for neobanks and digital-native insurers. It’s more effective to identify and leverage pockets of high-quality data where they already exist.

2. AI will make my processes better.
AI can make existing processes marginally better, but the real value comes from redesigning and optimizing those processes to take full advantage of AI. That’s where transformational impact occurs.

3. No additional changes are needed.
Successful AI adoption requires effective change management, supported by modern tools, training and communication. Without this, even the best AI solutions struggle to deliver value.

Organizations will undoubtedly move beyond tactical efforts toward more comprehensive AI strategies over the next few years. Executives will focus not only on technology investments but also on the cultural and behavioral changes needed to deeply and sustainably embed AI across the enterprise.

The future of insurance: Lean operations, smart decisions and autonomous AI

What will the insurance industry look like over the next decade with AI at its core? Based on our conversations with global insurance executives, we expect the following shifts:

AI-transformed value chain

• AI reshapes the entire insurance value chain, from underwriting to customer service, through AI-driven and augmented decision-making.
• Insurers operate on value-focused, efficient models that combine AI and managed services to double down on core competencies.
• Traditional roles evolve to emphasize governance, oversight, judgment, and validation (e.g., many P&C underwriting roles shift from hands-on assessment to oversight).
• Operations become fully digitized and autonomously resilient, with:
  • Real-time AI detection and self-correction of disruptions
  • Embedded cyber-risk prevention
  • Instant platform updates rather than scheduled releases

Next-gen architectures: The engine of agility and innovation

• Legacy, monolithic on-premise systems are replaced by cloud-native, composable, AI-infused platforms.
• Modular, data-driven architectures enable greater agility, scalability, and rapid innovation (plug-and-play “LEGO®-style” assembly).
• Continuous, multisource, real-time data, including ecosystem data, supports autonomous decision-making and renders traditional segmentation obsolete as each customer becomes a “segment of one.”

Insurance everywhere: Proactive, embedded and hyper-personalized

• Insurance is embedded at the point of need—across travel, mobility, smart homes, rentals, airlines, events—so consumers no longer search for insurance.
• Business-to-business-to-consumer (B2B2C) and API-first models integrate seamlessly with third-party ecosystems, making partnerships a core growth engine.
• Underwriting shifts from reactive risk assessment to proactive risk mitigation, delivering preventative services and hyper-personalized, context-aware products.

Human insight: The key to trusted, high-impact AI

Achieving meaningful AI-driven outcomes and business value requires more than experimenting with isolated use cases. It calls for a thoughtful, holistic approach that brings together the right data foundation, scalable cloud platforms, advanced analytics capabilities, and critically, the people and culture needed to adopt responsible AI. The most successful organizations recognize that AI is not a standalone technology but a driving force behind the transformation of the insurance industry for years to come. It’s an evolution that, when approached strategically, can deliver revolutionary results.

As AI reshapes the industry, maintaining a strong human-in-the-loop approach is critical to preserving trust, steering cultural transformation, and protecting your AI-enabled operations. By combining thoughtful structure with the courage to innovate, organizations can shape the future of insurance offerings.

Connect with me to discuss how your organization can accelerate its AI strategy to drive measurable value and long-term success.