Carriers plan to increase their investments in AI over the next five years

Life and annuity carriers are on a journey to move from modernizing their legacy technology systems toward a greater investment in data analytics, artificial intelligence and machine learning.

LIMRA and EY conducted a session Sunday at the LIMRA Annual Conference on the results of a study they did on life insurance companies’ investments and future priorities in technology.

“As life insurance companies try to modernize their legacy systems, a lot of that technology continues to consume a lot of resources,” said Keith Golembiewski, senior director of strategic initiatives with LIMRA and LOMA. “However, I think we are either getting closer or we are getting to that tipping point where we will start seeing a shift. I think you will start to see a lot of capital – people capital as well as dollar capital – be freed up. And as capital is freed up, I believe we will see more focus on data analytics, AI and machine learning.”

Golembiewski said the study findings showed life insurers believe distribution and customer knowledge are the main areas in which they either have a competitive advantage or will gain a future advantage with new investments over the next few years.

“When we looked at where carriers are investing and what will have the biggest impact on them over the next five years, we found that new technology and evolving consumer expectations were at the top of the list,” he said.

Carriers are investing in digital transformation as well as product development, he said. Underwriting, new business development and policy servicing are some of the top areas in which carriers are making digital investments.

“We also saw in the study findings that insurers are investing in digital aspects for marketing, sales tools and illustration,” Golembiewski said. “And we also saw modernization investments in claims.”

The use of generative AI was one topic that jumped out of the research, Golembiewski said.

“We have been thinking about the ways generative AI can increase operational effectiveness, open up new innovation opportunities and deepen customer relationships,” he said. “So it was interesting to see that carriers predicted their investments in AI capabilities will double over the next five years.”

LIMRA and EY conducted some focus group interviews in which insurers indicated they believe they must invest in technology, Golembiewski said. “Especially if their customers want it or they need it for their competitive advantage.”

Golembiewski said the research also found insurers are making continued investments in areas such as cloud computing.

“There are a lot of different areas of opportunity, but as dollars and resources free up from the legacy side, you will see insurers investing in customer experience, digital experience, cloud computing – really trying to deliver the best customer experience overall.”

Susan Rupe is managing editor for InsuranceNewsNet. She formerly served as communications director for an insurance agents' association and was an award-winning newspaper reporter and editor. Contact her at [email protected]. Follow her on Twitter @INNsusan.

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