Over the past decade, many insurers have automated key processes, such as document classification, policy issuance, and claims triaging. Many have also implemented rule-based workflows for claims, underwriting, policy servicing, and compliance monitoring. A results has been faster turnaround and reduced operational overhead.
Still, insurers remain caught between legacy systems and growing expectations from customers, regulators, and the business itself.
Artificial intelligence (AI) is helping bridge that gap. From underwriting and claims to compliance and customer engagement, AI is quietly but smartly reshaping insurance operations. A poll conducted by Global Data in Q3 2025 found that 46% of respondents identified underwriting and risk profiling as the functions most improved by AI. This was followed by claims management at 20% and customer service at 18%.
Let's explore how AI is fueling transformation across key insurance functions.
Smarter, Real-Time Underwriting
Underwriting has long relied on historical data and static models. But today's risk environment is far more dynamic. From climate changes and emerging health risks to evolving customer behavior and stricter regulatory pressures, underwriters face growing complexity and faster change.
One way to deal with the challenges, without missing compliance or overlooking digital fraud, is a strategic adoption of AI tools. Leading U.S. insurers are now using AI to improve efficiency, access real-time insights, and make more accurate risk assessments. According to the Zipdo Education Report 2025, AI-driven underwriting can reduce policy issuance times by up to 50%.
Keeping predefined checklists aside, underwriters now leverage AI to analyze vast volumes of structured and unstructured data sets, many of which would be extremely tedious to process manually.
For example, AI assists underwriters by:
- Surfacing localized risks through geospatial data and NATCAT data
- Flagging inconsistencies in applications or documentation
- Recommending optimal pricing strategies for individual customer profiles
AI acts as a powerful assistant to the underwriters, helping them evaluate risks more precisely and confidently. For instance, the need for health insurance or occupational risk coverage for gig workers can also be fulfilled with customized plans crafted with the help of AI-powered insights. The outcome? Enhanced scope of scalability, better pricing, faster decision-making and reduced risk exposure.
Faster, Fairer, and More Efficient Claims
Claims have long been a pain point, often drawn out, paperwork-heavy, and emotionally taxing for policyholders. AI is helping insurers transform the entire claims lifecycle, from intake and validation to assessment, resolution, and follow-up. A 2025 BCG report stated that AI is enabling up to 50% faster claims processing, 20–50% cost reduction, and, in simple claim cases, real-time resolution for as many as 70% of claims.
Let's take a simple example of an auto insurance claim to understand the role of AI in streamlining claims:
- At intake, AI-powered chatbots can guide the customer to report the incident by capturing videos and photos via a mobile app.
- For validation, AI models can instantly cross-check the claim against policy details and detect inconsistencies or signs of potential fraud.
- During assessment, image recognition tools help to evaluate vehicle damage from uploaded photos and generate repair estimates.
- For resolution, the system can recommend a settlement or flag complex cases for review, ensuring fairness.
- Post-resolution, AI can trigger personalized updates and feedback requests, helping insurers close the loop and improve customer experience.
Automating repetitive steps and offering intelligent insights enables teams to handle claims faster and focus more on empathy, accuracy, and customer satisfaction.
Personalized Customer Engagement
Customer engagement in insurance has traditionally been reactive. Insurers typically contact customers at policy renewal time or respond only when a customer reports a claim. But this model is evolving.
Today's customers are bringing expectations shaped by digital-native companies like Amazon, Uber, and Netflix. Customers have grown accustomed to frictionless, personalized experiences that anticipate their needs and offer relevant recommendations. An industry report found that 75% of consumers say they are more likely to purchase insurance from a company that offers personalized experiences.
This shift is pushing insurers to rethink engagement beyond transactional touchpoints. AI makes that possible by integrating with CRM, policy, and service systems to deliver timely, omnichannel, and relevant communication across the policy lifecycle.
For instance, AI recommends coverage updates when customers move to high-risk areas or triggers reminders ahead of seasonal risks like flood protection during hurricane season. AI also ensures consistent experiences across channels.
This level of personalization helps insurers not only meet rising expectations but also build trust, drive loyalty, and deliver standout customer experiences.
The Road Ahead
The most successful insurers are no longer asking if they should use AI; they're asking where and how it can best support their people and processes.
According to a 2025 Statista report, nearly half of global insurers plan to integrate AI into their operations this year. And it's not just for experimental pilots. AI is deployed to modernize core functions, creating real, scalable value across the enterprise.
But AI adoption must be thoughtful. U.S. insurers value transparency, explainability, and control. That means selecting AI tools that offer clear business logic, allow for human oversight, and align with ethical governance frameworks.
Conclusion: Human Intelligence, Enhanced
AI is not here to replace the underwriter, adjuster, or compliance officer. Instead, it equips them with better data, deeper insights, and more time to focus on serving customers, managing risk, and driving growth.
The most powerful transformation in modern insurance will not come from technology alone but from the synergy between intelligent systems and human expertise. An AI-first core platform for insurance can boost ROI and reduce the complexity of transformation. To realize this, insurers must build an AI-first culture, invest in explainability and ethics, and establish governance frameworks that empower humans and machines to work harmoniously.
