In the race to harness Artificial Intelligence, we see insurance carriers making three strategic errors that will fundamentally undermine the value of their AI initiatives:
Replicating Functional Silos Obstruct Enterprise Insight: The natural, but flawed, tendency is to develop AI solutions aligned with existing organizational departments -Underwriting, Claims, Actuarial. This approach forfeits AI’s most powerful feature: the ability to unify vast, disparate data streams. Optimal risk decisions require a holistic view of a policy’s complete lifecycle, integrating quotes, endorsements, claims history, customer/agent behavior, and more. Developing siloed AI limits the business to a partial, and therefore inferior, understanding of enterprise risk.
Restricting Data Models to Legacy Core System Data Creates Expensive Risk Blind Spots: Solutions are often built on pre-existing, core system data models. This omits crucial behavioral signals—from both customers and agents—that are essential for real-time risk assessment. To unlock the true predictive power of AI, a comprehensive data model that seamlessly integrates these critical transactional behaviors is non-negotiable. Failing to do so ensures the AI will deliver sub-optimal results.
Waste AI’s Analytical Power Pursuing Minor, Incremental Gains: The greatest strength of AI is its capacity to process immense data volumes and generate actionable, high-fidelity conclusions. Simply using AI to digitize existing, manual processes is a massive missed opportunity. A truly effective AI risk solution should be designed to identify and automate the detection and resolution of hundreds to thousands of unique risk scenarios, fundamentally transforming transaction flow and decision-making.
The Strategic Imperative
Getting this right now is a critical priority. The pace of innovation driven by AI is accelerating radically. Trailing the market in core risk selection and management capability is rapidly becoming an unsustainable competitive disadvantage. Carriers must elevate their AI program to a core strategic mandate to secure their future in the industry.
A Clear Opportunity
The good news is that timely, thoughtful AI implementation provides an opportunity to reset the field. AI allows aggressive carriers to leapfrog decades of costly, less-functional technology investments made by market leaders. This window to fundamentally level the playing field on risk selection and management excellence is open now, but it will not remain so for long.
