According to a recent report by Boston Consulting Group (BCG), the insurance industry is lagging behind other sectors in adopting generative AI (GenAI), with 40% of insurance companies showing minimal or no use of this technology.
The report includes a GenAI maturity index to evaluate company adoption levels. Based on their implementation across ten business functions, companies were categorised into four groups: little to no adoption, low maturity, mid maturity, and high maturity.
Tech companies are leading, with 62% classified as mid or high maturity. Banking, retail, industrial goods, and healthcare follow, with 32% to 39% of companies reaching similar levels. In contrast, industries like energy, travel and tourism, and insurance are trailing, with at least 40% of companies in each showing little to no adoption of GenAI.
Although BCG’s analysis shows that the insurance sector is behind other sectors when it comes to GenAI adoption, the technology is expected to have an impact on numerous parts of the industry. A recent poll by Reinsurance News found that re/insurance market participants expect AI to have the biggest impact in risk modelling and analysis.
BCG’s report emphasises that GenAI is gaining traction as companies seek major productivity improvements. Investment in GenAI is expected to grow by 30%, and companies with high GenAI maturity anticipate their return on investment will be three times greater over the next three years compared to those with little or no adoption.
Clark O’Niell, a managing director and partner at BCG and a coauthor of the report, said, “The emergence of GenAI has made it imperative for many companies to adapt.”
He added, “Successful companies will be those that manage a difficult balancing act: allocating IT budgets to keep pace with GenAI while maintaining adequate funding for essential day-to-day operations.”
The report identifies the immaturity of GenAI technology as the primary barrier to adoption. This challenge is noted by 43% of companies with high maturity, 36% of those with mid maturity, 38% of those with low maturity, and 50% of companies with little or no maturity. Additionally, about 30% of companies with minimal adoption have no plans to implement GenAI in the next three years.
Federico Fabbri, a Managing Director and Partner at BCG and a coauthor of the report, advised, “Despite the justifiable excitement surrounding GenAI, IT leaders must articulate a clear, strategic plan to garner CIO support, as mere hype won’t suffice in today’s tough budgetary environment.
He further suggested, “CIOs should adopt a systemic approach to IT investment request, including planning adequate resources for success, asking for a clear business case and how leaders plan to measure outcomes, and ensuring vendor support.”
