What if we have been looking at AI from the wrong angle? What if it is not a magic fix for the insurance industry’s legacy issues but is an unlock for the next generation of growth through insurable risks?
AI is emerging alongside forces already reshaping the global risk fabric: the rise of intangible assets and cyber exposure, mounting climate volatility, shifting global demographics, and an entirely new class of technologies. These are not distant scenarios, they are today’s realities.
The IIS Innovation Report reflects an industry in transition, a theme underscored during our executive working group session at the Swiss Re Centre for Global Dialogue in Rüschlikon. Leaders recognized that early AI efforts often focused too narrowly on efficiency and missed the broader strategic opportunity emerging across the global economy.
The discussions made it clear that the next decade will divide the sector between organizations making marginal improvements and those rebuilding their operating models around proprietary knowledge graphs, reengineered data flows, and augmented human judgment.
These foundations enable stronger risk selection, superior service performance, and loss prevention in a far more dynamic risk environment, while preserving what remains fundamentally human in our business: trust, advice, and long-term client relationships. AI agents can deliver transformative gains, but only for firms prepared to rethink governance, decision rights, talent, and data strategy.
This is the strategic inflection point. If we mobilize for it, insurance will not simply adapt, it will become one of the defining stabilizers of an increasingly connected and AI-enabled world!
Executive Summary
AI transformation is sweeping the insurance industry
The IIS Report on Innovation, which draws from a diverse respondent pool across insurers, reinsurers, insurtechs, and consultancies, finds that, while enthusiasm for AI is high, maturity levels vary significantly by company size and type. Larger firms are generally further along in production deployment, while smaller firms are focusing more on exploration and customer-facing innovation.
Efficiency remains the primary driver of AI adoption
Operational efficiency and workflow optimization dominate current AI priorities, with 53% of respondents citing them as top focus areas, followed closely by underwriting, pricing, and claims management. These findings indicate that insurers are initially using AI to strengthen core processes rather than disrupt existing models. Smaller firms, however, show a stronger tendency toward leveraging AI for customer service and market expansion. Metrics of success largely center on productivity gains, data accuracy, and improved customer experience, though formal frameworks for ROI measurement are still evolving across the industry.
Experimentation is widespread but deployment maturity is limited
Adoption data reveal that about 87% of companies are pursuing GenAI initiatives, though only around a quarter have reached production-level implementation. Budgets dedicated to AI average 3.9% of overall spending. Most firms rely on third-party general-purpose large language models like ChatGPT, while larger organizations increasingly explore first-party or industry-specific models. Leadership of AI innovation typically originates at the executive level – especially CEOs, boards, and CTOs/CIOs – indicating strong top-down strategic ownership of AI adoption.
Key challenges focus on governance, data, and talent
This report also identifies major challenges that can temper progress. Chief among these are concerns over data privacy and integrity, security, and bias management, as well as the difficulty of measuring ROI. Talent shortages and the lack of formal governance frameworks also impede scalable AI integration, especially for small firms. Most companies rely on human oversight rather than structured governance systems, though larger insurers are beginning to formalize processes through ethics committees, audit trails, and explainability standards.
Innovation is balanced with risk in the era of AI agents
Looking forward, the report highlights both excitement and caution surrounding the rise of autonomous AI agents in insurance. Top concerns – such as hallucinations, validation difficulties, and regulatory compliance – reflect an industry still grappling with trust and accountability in automated decision-making. Overall, the findings portray a sector experimenting, learning, and building the foundations for responsible, scalable AI adoption that enhances both operational excellence and customer experience
To download the full report, click here.
