Insurers unprepared to embrace generative AI – Oxbow Partners

Insurers are currently unprepared to embrace generative artificial intelligence (AI) across their operating models, according to the latest report from consultancy Oxbow Partners.

The maturity of generative AI in the specialty and reinsurance markets report, published yesterday (2 July 2024) found that the average score given out of 10 by carriers their for preparedness to adopt generative AI was just 5.2 out of 10.

A majority (80%) of respondents also cited that their firms’ strategic objectives were the biggest barrier to generative AI adoption.

Meanwhile, many other survey participants noted that they were taking a deliberate “wait and see” position by making investments in foundational capabilities, but scanning actively to see where others were making progress.

The report was based on interviews with senior leadership at 22 of the globe’s largest global reinsurers, insurers and specialty players and was conducted between April and May 2024. 

Speaking at the report’s launch event at Lloyd’s, Elizabeth Jenkins Lloyd’s Market Association (LMA) underwriting director, said that the report had sought to identify whether the market was “at the foothills, or comfortably into the ascent” in its generative AI journey, as well as surveying the sector’s views on this technology.

She added: ”I have only been in my role for eight months, but I cannot recall a single meeting where AI was not mentioned in one shape or form.

”The topic can be really divisive, with much localised fear that it will take our jobs or provide worse untested outcomes.”

However, the technology could also provide efficiencies and take the friction out of certain roles, she said.

Truly transformative?

At the report launch, Miqdaad Versi, partner at Oxbow, noted: ”The report backs up our hypothesis that generative AI will be truly transformative for the industry.”

And a show of hands in the room further supported this belief, with 98% of attendees to the report launch agreeing that generative AI could be transformative to the sector.

Versi added: “There is a lot of foundational work that must be done. Executive teams need to create a deliberate strategy for AI and generative AI, consider how to set AI and generative AI up in business and consider the AI and generative AI angle on carriers’ transformation agendas and short-term priorities.

”We believe executives should think big, even if they are not ready to make the leap.”

Jenkins added: “Generative AI is one of the most talked about topics within the Lloyd’s market.

”It presents a huge opportunity for the specialty and reinsurance sectors to revolutionise their operations and products and, while there are challenges to overcome, particularly around talent, governance and data, the potential benefits are substantial.

”It is crucial for the industry to lean into the discussions to stay competitive and innovative.”