By Andrew Pollard, insurance specialist at SAS UK & Ireland
For years the insurance industry has been cautious in its adoption of emerging technologies. But that era is almost certainly over.
Research into the use of AI within the insurance sector has identified that insurance executives have identified using AI as a top strategic priority for 2025, proving it’s no longer just a future ambition but a present-day reality transforming how insurers operate, compete and engage with customers.
However, realising the full potential of the technology requires more than just a few isolated tools and pilots. Insurance companies need a clear, cohesive and governed AI strategy that seamlessly works in tandem with other tech being used by the organisation.
Automation with AI is already improving efficiency and customer satisfaction within some insurance companies, while there is real potential for agentic AI to have a further impact on the sector. From streamlining claims, detecting complex fraud patterns to reducing costs, insurers are increasingly using AI to drive faster, smarter and more customer-centric outcomes.
It is no longer an experimental technology – it’s becoming an operational necessity.
The core uses
Forward-thinking insurers who are already embedding AI across their IT systems are seeing it deliver tangible results in many areas.
- Reduced fraud & risk exposure
AI has one of the most valuable use cases in fraud detection. As insurance fraud has become more sophisticated and organised AI has the capability to spot bad actors using deepfakes, synthetic identities and digital manipulation in imagery. Agentic AI models can learn and adapt advanced pattern recognition, flagging suspicious behaviour and spotting similarities in fraudulent claims and applications. - Improved combined ratio/profitability
Fast, accurate claims processing is essential for customer satisfaction. AI-powered natural language processing (NLP) can interpret incoming claims and process them quicker, assess and summarise policy details, and even make settlement recommendations – reducing the workload of employees and turnaround times. Some insurers can now process simple claims in hours, rather than days, which results in happier customers, lower overheads and improved consistency. - Enhanced customer experience
AI also plays a crucial role in keeping policyholders loyal. Predictive analytics can identify which customers are most likely to cancel or renew their policies, and the reasons for this. Therefore, enabling timely, personalised outreach and dynamic pricing models can allow insurers to deliver a more tailored offering, meeting customers where they are and understanding what could persuade their renewal.Â
Solving the data problem
One of the biggest hurdles insurers are facing is with their data – ensuring data quality, completeness and privacy. Legacy systems are often siloed or contain incomplete and missing records.
Enter synthetic data. This is proving to be a game changer in the sector and enables us to train powerful models and simulate new use cases – even when the real-world data is scarce, sensitive or fragmented. Synthetic data is artificially generated datasets that mimic real-world data without exposing any sensitive information, and where the data remains statistically accurate.
Insurers are using it to train fraud detection algorithms on cases without compromising privacy. They are also using it to model new product rollouts under differing market conditions or conducting scenario testing for rare but high-impact risks.
This approach helps to overcome bias and fairness issues as synthetic datasets can be intentionally balanced and diversified.
Futureproofing with governance and responsible AI
Considering the insurance sector is among one of the most risk-averse, just implementing the technology alone isn’t enough. It needs to be integrated responsibly.
Insurers that invest in responsible and well-governed AI tools – underpinned by scalable systems and ethical data practices – will be better positioned to adapt to whatever comes next, whether that’s new fraud instances or changing customer behaviours. It’s about gaining and maintaining customer trust too.
Surging customer expectations for access to digital services, means there is increasing operational pressure for organisations to keep up, and the rise of AI-enabled fraud has combined with this to accelerate adoption. With the right strategy insurers can unlock both operational excellence and true innovation.
Implemented with care, AI enables insurers to move faster, serve customers better and build the kind of resilient, responsive operations that tomorrow’s marketplace demands. Firms are already fully embracing AI and defining the standards for what AI-powered insurance will look like in the next 5-10 years. They are forcing a shift in the whole sector.
It’s time for the C-Suite and decision makers to see that AI is no longer something discussed by innovation teams. It’s tied directly to growth, competitiveness and trust – and has the ability to transform the insurance sector.
