How Generative AI Powers Growth in Insurtech
Within the dynamic realm of insurance, technology plays a critical role, especially when discussing the potential of generative AI, or Gen AI. Industry leadership, particularly CEOs, are not only embracing Gen AI, but are also prioritising it higher than any other sector. Also, 81% of these leaders highlight it as one of the primary investment focuses for their operations.
The foundation of AI in the insurance industry is data, a critical element in shaping insurtech's future. CEOs believe that mastering AI technologies will be a deciding factor distinguishing their brands from the competition, especially in a sector traditionally not known for rapid productivity enhancements. Generative AI is foreseen to disrupt this status and propel the industry forward.
According to recent statistics from the KPMG 2024 Insurance CEO Outlook, a staggering 93% of insurance CEOs plan to expand their workforce over the next three years. This contrasts with a common misconception about AI as a job reducer; here, it's a facilitator of growth. Alongside this, a robust 73% of these CEOs are optimistic about their companies' growth prospects despite the challenges posed by geopolitical tensions, economic uncertainties, and the complexities of digital transformation.
'Over 90% of insurance CEOs expect to see their workforce expand over the next three years'
Embracing Digital Transformation and ESG Goals
Another major focus revealed in the survey is the concerted push towards accelerating digital transformation. Insurance leaders are not only working towards integrating advanced digital practices into their daily operations but are also keen on fulfilling their Environmental, Social, and Governance (ESG) commitments. A majority (63%) of them are confident about achieving net-zero targets by 2030, showcasing their dedication towards sustainable business practices.
Challenges amid Innovation
However, despite the eagerness to integrate AI and other digital innovations, there remain concerns, particularly about cybersecurity. The KPMG report highlighted a drop in confidence among CEOs about their readiness for a cyber attack, from 66% feeling prepared last year to only 54% this year. Additionally, only 43% believe that their strategies could keep pace with AI-driven advancements in cybersecurity, indicating significant areas for improvement and investment.
Leadership Insights
Insights from industry leaders underscore this optimistic yet cautious approach towards embracing AI. Huw Evans, head of insurance at KPMG UK, remarks on the positive outlook CEOs have for their companies, noting expected growth in not just revenue but also personnel, "Over 90% of insurance CEOs expect to see their workforce expand over the next three years as they look to Gen AI to improve data analytics and fight financial crime rather than eliminate jobs."
Frank Pfaffenzeller, head of global insurance at KPMG International, also emphasizes the strategic imperatives of generative AI. He sees it as pivotal for advancing digital transformation, meeting ESG goals, and boosting productivity. He suggests, "Those organisations that move further and faster toward a sustainable and digitally enabled future could gain a significant market advantage."
The proactive embrace of Gen AI and digital advances reflects a significant pivot in the global insurance sector which is projected to expand robustly. With an estimated value between US$6-7 trillion in 2024 and an expected growth rate of 5.5% annually, the sector could approach nearly US$10 trillion by 2028, according to the Allianz Global Insurance Report.
As the industry gears up for transformative changes, adhering to these technological and strategic shifts is critical for firms aiming to capitalize on the evolving market dynamics and to sustain competitive advantages over the long term.
"Over 90% of insurance CEOs expect to see their workforce expand over the next three years as they look to Gen AI to improve data analytics and fight financial crime rather than eliminate jobs."