Insurers Lagging in Readiness for Generative Artificial Intelligence, Finds Oxbow Partners Report
In the ever-evolving landscape of the insurance industry, the role of technology is becoming increasingly crucial. Artificial Intelligence (AI) has been a buzzword for some time now, with many insurers implementing various forms of AI to improve their operations. However, according to the latest report from consultancy Oxbow Partners, insurers are currently unprepared to embrace generative AI across their operating models.
Generative AI, a subset of AI that involves machines creating new content, such as images, text, or even code, is seen as a truly transformative technology for the insurance industry. The report, based on interviews with senior leadership at 22 of the globe’s largest global reinsurers, insurers, and specialty players, found that the average score given by carriers for their preparedness to adopt generative AI was just 5.2 out of 10.
One of the biggest barriers to generative AI adoption cited by respondents was their firms’ strategic objectives. Many insurers are taking a “wait and see” approach, making investments in foundational capabilities but waiting to see where others are making progress. This cautious approach may be inhibiting insurers from fully embracing the potential benefits of generative AI.
At the report’s launch event at Lloyd’s, Elizabeth Jenkins, Lloyd’s Market Association (LMA) underwriting director, emphasized the importance of leaning into discussions around generative AI to stay competitive and innovative. She acknowledged that there is some fear surrounding AI and generative AI, particularly the concern that it could replace jobs or provide untested outcomes. However, she also highlighted the efficiencies and opportunities that generative AI could bring to the industry.
Miqdaad Versi, partner at Oxbow, echoed this sentiment, noting that generative AI has the potential to be truly transformative for the industry. He emphasized the need for executive teams to create a deliberate strategy for AI and generative AI, setting it up in the business and considering it on carriers’ transformation agendas and short-term priorities.
Overall, the report paints a picture of an industry that is aware of the potential of generative AI but is struggling to fully embrace it. The challenges around talent, governance, and data must be overcome for insurers to fully leverage the benefits of generative AI. It is essential for the industry to engage in discussions and stay ahead of the curve to remain competitive and innovative in the rapidly evolving landscape of the insurance industry.