As of June 2025, generative AI (GenAI) has moved from experimental pilot to industry mainstay, redefining how insurers operate, innovate, and connect with customers. With more than 40% of insurance executives already reporting positive impacts on productivity and customer experience, GenAI is now central to strategies for growth, efficiency, and risk management.
GenAI: From Hype to Practical Transformation
The insurance sector is investing heavily in GenAI, with spending expected to surge by over 300% between 2023 and 2025. Insurers are rapidly moving from isolated GenAI pilots to broad, enterprise-wide deployments. This shift is driven by the urgent need to keep pace with competitors, meet rising customer expectations, and unlock new levels of operational agility.
Hyper-Personalisation and Customer Engagement
GenAI’s most visible impact is in the realm of customer experience. AI-powered virtual assistants and chatbots now deliver hyper-personalised service—adapting recommendations, policy options, and communications to individual preferences and behaviours. These systems are available 24/7, providing instant answers, guiding customers through claims or onboarding, and even anticipating needs before they arise.
This personalisation is boosting satisfaction, retention, and conversion rates. Early adopters of GenAI in customer-facing systems are seeing up to a 14% increase in retention and significantly higher customer loyalty scores.
Smarter, Faster Underwriting and Claims
GenAI is streamlining underwriting by automating risk assessment, integrating data from diverse sources, and generating nuanced risk profiles in real time. Underwriters can now evaluate applicants more quickly and accurately, reducing manual effort and minimising bias.
In claims, GenAI automates everything from document review to fraud detection. By analysing images, text, and structured data, GenAI can flag anomalies, process straightforward claims instantly, and route complex cases to human experts. This has led to a reduction in claims processing times by as much as 80% and a measurable decrease in claims leakage and fraud.
Operational Efficiency and End-to-End Automation
Beyond front-line tasks, GenAI is driving end-to-end automation across compliance, risk management, and reporting. Insurers are using AI to monitor regulatory changes, automate documentation, and ensure data integrity, reducing overhead and freeing up skilled staff for higher-value work.
Navigating Risks and Responsible Adoption
While the opportunities are immense, GenAI also introduces new risks—particularly around data privacy, cybersecurity, and potential bias. Insurers are responding by updating policy language, clarifying coverage for AI-related risks, and building robust governance frameworks to monitor, audit, and explain AI-driven decisions.
Regulators and industry bodies are also stepping up, with new surveys and guidelines to ensure GenAI adoption is ethical, transparent, and compliant.
The Road Ahead
As GenAI continues to evolve, insurers will see even greater integration across all business functions. The winners in this new era will be those who combine speed of adoption with a commitment to responsible, transparent, and customer-centric AI.
GenAI is not just a technological upgrade—it’s a strategic shift that is reshaping what’s possible in insurance. By embracing this transformation, insurers can deliver better experiences, smarter products, and more resilient operations for a rapidly changing world.