AI adoption has dramatically changed insurance landscape, expert says

The adoption of AI into the insurance value chain has been the biggest factor to transform the insurance industry in recent times, according to Manu Mazumdar, director, insurance research, Conning.

In a recent webinar, Mazumdar noted that AI has already transformed customer service, service delivery, expenditure trends, and workforce expectations in the few years since it has become more mainstream in the U.S. insurance industry.

“AI is no longer an emerging technology. It is driving real results across the entire insurance industry. It has evolved from a concept just a few years ago to making a real impact across the entire insurance business value chain, highlighting the steady trajectory towards greater efficiency and accuracy for the industry and our clients,” Mazumdar said.

Generative AI in particular has made significant strides, with data from Conning indicating its uptake has gone from near-zero to 55% in the last 12 months alone.

“The U.S. insurance industry's journey with AI reflects an ongoing balance, leveraging cutting-edge technology to automate and enhance decisions while maintaining human oversight and trust. With AI continuing to advance, insurers are poised to further refine the risk prediction, streamline claims and incorporate AI in all parts of the value chain to improve the overall customer experience in the years ahead,” Mazumdar said.

Uptake steamrolls ahead

To emphasize his point, Mazumdar cited data from an annual Conning study that surveys top decision-makers in the insurance industry to examine adoption of AI and related technologies.

He noted that this year’s results show “a dramatic shift in AI adoption,” with the percentage of insurers fully adopting AI into their value chain jumping from 8% last year to 34% in 2025. This marks a 400% increase.

Just under 90% of respondents said they are in at least some stage of adopting AI, up 12 percentage points from 2024. Last year’s results had already been a 16 percentage point increase from the year before, showing a steady increase over the past few years.

Adoption of large language models jumped from 18% in 2024 to 63% this year, and 74% of insurers surveyed had achieved full integration of machine learning and predictive analysis into their core processes.

Broken down based on type, GenAI saw the biggest increase in uptake year over year. However, this is because Conning did not measure GenAI at all in last year’s survey. This year, 10% of insurers who responded said they are at the conceptualizing phase, while 34% have launched pilots, 37% are in the early adoption phase and 18% have fully adopted it.

LLMS have gone up from 3% full adoption to 32% this year, while speech recognition has gone from 8% to 40%.

Machine learning and predictive analysis also jumped significantly, up from 15% last year to 47% this year. According to Conning’s data, it’s also the category with the highest overall rates of adoption as rates either near or exceed 70% across operations and claims, risk control and pricing and shared services (IT, HR, etc.).

“Machine learning and predictive analytics tends to be a very popular technology in insurance for multiple components, which is understandable given its quantitative and predictive nature, which is germane within the insurance business,” Mazumdar said.

Commitment to AI and workforce evolution

Mazumdar also said the insurance industry appears committed to continued development and adoption of AI based on a trend of “continually increasing expenditures” in technology.

“Annual spending has outpaced inflation, demonstrating consistent growth even during periods of economic recession. The increase in expenditure on software and equipment may be anticipated by external observers. However, the changing composition of the insurance sector workforce due to technology and technological advancements may be less expected,” he said.

Elaborating on that point, Mazumdar cited Bureau of Labor Statistics data that claims there has been a “notable decline” in lower-skilled and lower-paid clerical positions but “significant growth” in higher-paid and higher-skilled insurance occupations from 2002 to 2024. He suggested this could be due to the adoption of AI.

“Now, there is uncertainty about whether growth will continue in the new AI era, or if these career paths will be disrupted. The future with AI may see a shift in skills as people use AI tools for problem-solving and increasing productivity. Our perspective is that the skillsets for the next decade will be around AI and big data, on technological literacy, on creative thinking, resiliency, flexibility and agility, analytical thinking,” Mazumdar said.

He emphasized, however, that a significant need for human oversight will persist as demand from customers for personal human interactions will increase. As such, it’s expected that service orientation and customer service will remain a critical skill amid the evolving skills landscape.

“Responsible adoption of AI is key. Speed to adopt should not be at the expense of thoughtful change. It is critical to balance innovation with empathy, governance and, most importantly, trust,” Mazumdar said.

Conning is a global asset management firm founded in 1912 and based in Hartford, CT. The firm has a dedicated insurance research department, comprised of a team of experts that provides forward-looking insights and strategic analysis to help insurers navigate change and identify opportunity.

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