Many parts of the insurance sector, which have previously been marred by legacy technology, are now undergoing rapid digital transformation. AI, automation, and embedded insurance are just some of the technologies driving change in everything from underwriting and claims to customer engagement, leading many industry firms and leaders to rethink their approach.
To kick off our insurtech focus, we first asked industry experts what trends they’re seeing impact the insurance sector the most.
Here’s what they had to say.
AI driving change
“Artificial Intelligence (AI) is transforming insurance from front to back,” explains Dean Standing, chief revenue officer at data consultancy Sagacity. “It enables hyper-personalised, real-time quoting by analysing data like credit scores, claims history, car model, and local crime rates to build precise customer risk profiles.
“In claims, AI is accelerating resolution by automating triage – assessing who, what, when, and even recommending outcomes. This reduces the need for human intervention on standard cases, allowing advisers to focus on complex, high-touch scenarios and slashing resolution times.
“AI-powered chatbots have also evolved significantly. No longer limited to basic queries, they now deliver tailored support around policies, coverage and claims – 24/7. This lifts the burden of routine engagement from agents while enhancing the customer experience.”
Trends impacting industry-wide
Daniel Cole, senior managing director at Publicis Sapient, the digital consulting company, also agrees that AI is having a significant impact on the sector, but shares other trends also changing the way firms approach insurance.
“The insurance industry is experiencing a fundamental technological shift driven by several converging trends. Cloud-native architectures are becoming essential, providing the speed and predictability insurers need to compete with agile insurtech startups. API-ready platforms are enabling seamless data integration and cross-product proposition development, breaking down traditional silos.
“The increase in available data sources is transforming risk assessment capabilities. Connected devices and IoT provide valuable real-time insights that enable proactive risk management, such as helping prevent cyber breaches before they occur, tracking risk concentration through our global supply chains or supporting pet owners throughout their ownership journey with enhanced services.
“Digital customer engagement has evolved dramatically, with AI-powered personalisation and marketing technology creating opportunities for truly tailored customer experiences. Embedded insurance through APIs is opening exciting new distribution channels, allowing coverage to be integrated seamlessly into customers’ existing experiences.
“Perhaps most significantly, we’re witnessing beneficial industry convergence. Automotive manufacturers are creating value by bundling insurance with connected services, while tech companies bring fresh perspectives to traditional insurance markets. This convergence presents tremendous opportunities for insurers to collaborate and create innovative, ecosystem-based solutions.”
Modernising insurance
Jamie Allsop, managing partner, financial services at HTEC, an AI-powered digital product design company, also shares a number of insurtech trends he’s seen having a big impact.
“Customer experience is absolutely the biggest trend we’re seeing right now. It’s on the mind of every CIO in the industry. The fundamental issue is that most UK insurance businesses have grown out of old technology systems, with about 40 years of legacy debt built up over time. Instead of properly addressing this legacy debt, what companies have done is simply build new systems alongside the old ones.
“The second major trend is artificial intelligence implementation. Every CIO we speak with is asking the same question: How is AI going to change my business? There’s a particular focus on AI agents for call centres and customer service operations. When you consider the future of call centre operations, much of that interaction will likely be handled by AI agents rather than human representatives.
“Legacy system modernisation represents the third critical trend. Traditional insurers rely on mainframe-based systems that require weeks to implement changes, while modern financial technology companies can make modifications very quickly due to their contemporary architecture. This creates a significant competitive disadvantage for established players.
“Cost optimisation drives all these trends. Some UK insurers are currently spending a lot of their technology budgets simply maintaining existing systems rather than investing in innovation. This creates an unsustainable situation where CIOs must balance addressing technical debt while simultaneously meeting business demands for new products and improved customer experiences.”
AI, AI and AI
Peter Kelly, senior managing director in the insurance practice at FTI Consulting,
“The biggest tech trend in insurance today is new modelling technology. Almost every insurer today is exploring how to leverage the latest modelling technologies, from machine learning to AI methods, including generative AI. Most insurers of any size have deployed one or more of these technologies and to be fair, the results are mixed. The modelling teams of insurers are saying that the models in the lab are the most powerful they have ever worked with. But in the lab, those models are predicting the past, not the future.
“Curiously, when these new AI or ML models are put into practice in the market, they are almost always weaker than they were in the lab, or they produce unacceptable results, like radical shifts in the mix of business. This has led insurers to re-think the decisions to use the models in mission-critical applications like pricing or claims automation. Insurers are concerned that they may have unwisely over-relied on technologies they did not fully understand. The Gen-AI in customer service or written correspondence is fine, but using advanced models in the applications that drive profit is starting to worry insurers, and regulators!
“The solution is not straightforward because these models are not built by people, they are built by computers. Insurers who abandoned old controls and testing methods when the new technologies came along are realising that they must restrain the way ML and AI programmes build the models, and build new governance measures to use human oversight to challenge and test these models pre- and post-deployment. The insurance modelling future is indeed bright, but without changes, there may be storms ahead.”
Which areas stand to gain the most from AI?
“To nobody’s surprise, AI is the biggest emerging trend. However, there are key sectors within the industry that stand to benefit the most,” adds Andre Gagne, CEO of digital transformation company GFT Canada.
“The first is in internal day-to-day capabilities. Financial organisations are currently seeing the highest AI gains from internal automation. For instance, internal creation, delivery and review of critical documents – whether they be in the policies, claims or loss adjustments portion of the insurance life cycle – becomes much more efficient with AI, and reduces processing times significantly.
“The other most implemented AI use case is fraud detection. A persistent challenge for insurers is the submission of fraudulent claims, which, if unchecked, can result in massive losses for companies. We have already seen first-hand insurers leaning on AI to help prevent these types of setbacks. For example, one of Canada’s largest multi-line insurers deployed a custom AI algorithm to identify anything unusual or suspicious in customer data to detect fraud.
“AI is also beginning to reshape how insurers approach pricing. Companies like Akur8 are pioneering AI-driven pricing platforms that help insurers set fair, risk-adjusted premiums by leveraging the vast amounts of data they already collect. This allows for more responsive and precise pricing strategies while ensuring regulatory compliance.
“Something that is not prevalent yet but is emerging is also the use of AI agents. Insurance companies are gradually beginning to introduce internally facing AI agents and chatbots to assist with everything from underwriting to the gathering of data.”
Key risks to consider
While it appears that AI is almost universally seen as the biggest driver of change in the insurance sector, Alastair Mitton, partner at RPC, a law firm for big tech, warns of the risks that AI advancements could bring.
“The insurance sector is rapidly adopting AI, in line with broader trends across the financial services sector. According to the Bank of England and FCA‘s latest survey, 75 per cent of firms are already using AI, with another 10 per cent planning to adopt it within the next three years.
“Insurers are exploring the ways AI could allow them to deliver ultra-personalised products and customer experience, streamline policy administration and claims processing, and improve pricing and modelling. The emergence of agentic AI also promises to transform customer service operations.
“However, these advancements bring notable risks. Key concerns include increased cyber threats, potential bias in AI models, reduced transparency, and fairness in automated decision-making. Regulators are placing growing emphasis on accountability, data protection, and ethical use – underscoring the need for caution as insurers integrate these technologies.”
