The insurance industry is rapidly embracing Artificial Intelligence (AI), but challenges related to implementation and regulatory compliance remain. According to Earnix’s third annual 2024 Industry Trends Report, AI adoption is set to expand significantly in the coming years. The report, based on insights from over 400 insurance executives, reveals a strong shift towards using AI-driven, real-time data predictions.
Currently, fewer than 30% of insurers use AI models for real-time predictions. However, 70% of executives plan to implement such technologies within the next two years. This shift suggests a growing reliance on AI for business strategies, particularly in areas like predictive analytics.
Compliance and Regulatory Challenges
Alongside the push for AI adoption, insurance companies are grappling with rising regulatory pressures. Over half of the executives surveyed reported that their companies had faced fines or issued refunds due to operational errors in the past year. This has led to an increased focus on compliance, with 70% of executives indicating that more time will be dedicated to regulatory activities in the upcoming year.
Aaron Wright, Director of Strategy at Earnix, highlighted the importance of real-time AI models, stating that they could enhance collaboration and innovation while also helping insurers meet ever-increasing regulatory demands.
Struggles with AI Implementation
Despite the growing priority of AI and regulatory alignment, insurance companies face operational hurdles. According to the survey, 58% of companies take more than five months to implement a rule change, and 21% experience delays of more than seven months. Additionally, 49% of respondents acknowledged that their firms are behind in modernizing legacy systems.
Robin Gilthorpe, CEO of Earnix, pointed out that while AI adoption is advancing, challenges like long rule change timelines and outdated technology continue to hinder progress. Moreover, factors like inflation, cybersecurity risks, and climate change are expected to add further pressure on the industry.
Survey Overview
The 2024 Industry Trends Report was conducted by Earnix in collaboration with Market Strategy Group, LLC. It surveyed 431 insurance executives from a range of global regions, including North America, Europe, and Australasia. Participants included professionals from various sectors, such as actuarial, analytics, product management, C-suite, and IT.
In summary, while AI adoption is on the rise in the insurance industry, operational and regulatory challenges continue to complicate the full potential of these advancements.
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