Insurers regularly experiment with emerging technologies to find more efficient and effective ways to manage information, workflow, and risk. On Thursday, March 16, I hosted Aite-Novarica Group’s webinar Emerging Technology in Insurance for 2023, along with my colleagues Head of Property & Casualty Insurance Martina Conlon and Senior Principal John Keddy.
Our discussion centered on current trends in the deployment of emerging technologies, with a focus on AI technologies including machine learning, image recognition, voice recognition, and unstructured text. We highlighted four key trends for insurers working with AI capabilities.
Deployment Rates of Emerging Technologies at Insurers
How many insurers leverage a new technology is a product of several factors: how new or established the technology is, how clear its value is, how well understood its applications to insurance processes are, and how readily it can integrate with existing processes. 2023 is similar to years past in this regard, with new technologies deployed at roughly 25% to 35% of insurers. Larger insurers tend to have higher deployment rates for new technologies than their midsize counterparts.
Maintaining Strategic Priorities in an Uncertain Year
Both life/annuity/benefits (L/A/B) and property/casualty (P/C) carriers are expecting a more challenging IT budget year. Broadly speaking, they plan to maintain their focus on strategic initiatives, absorbing higher staff and technology costs while staying the course on key priorities. This does create less flexibility to experiment with new technologies, and as a result, pilot rates for emerging tech are down in 2023 relative to prior years. No particular technology saw its pilot rate crater, but most are down 5%-10% relative to 2022 and earlier.
AI Is a Hot Topic for Both P/C and L/A/B Carriers
One tech that isn’t going anywhere is AI. There’s broad consensus that AI-based technologies have clear value for insurers; consequently, pilot rates aren’t falling off much here. In the P/C space, there’s particular interest in image recognition, especially for aerial imagery to support property underwriting. Automated text ingestion is another area of active investment. Among L/A/B carriers, there’s more interest in voice recognition for customer service and sentiment analysis.
Moving From Pilots to Production
For all emerging technologies, the decision to deploy requires strategic intent and purpose. It’s vital for carriers to think about the specific use cases for new technologies in their organizations. It’s also crucial to consider where using an emerging technology effectively may require rethinking business processes and workflows. Ultimately, technologies are tools, and tools need to be used properly to be effective.
Aite-Novarica Group’s Emerging Technology in Insurance report tracks adoption rates, planned pilot activity, and use cases across more than a dozen technology areas. It provides a brief overview of each technology, with actual or potential applications for insurers, and includes insights based on Aite-Novarica Group’s conversations with insurer technology executives. Visit our website to access the full reports for P/C and L/A/B insurers. If you would like to discuss this research further, contact me at [email protected].
