Insurers Expand AI Use but Keep Claims Decisions Human

Insurance News Desk: Insurers are expanding their use of artificial intelligence across operations, yet analysts caution that the technology should support claims handling rather than determine whether claims are paid.

There is a clear distinction between deploying AI to gather information, identify anomalies or process routine queries and allowing it to make final payment decisions, according to Ross Sinclair, chief executive of EIP Ltd. He recommends that insurers rely on their own configured rule engines to automate processing steps while keeping ultimate claim decisions firmly under human and organisational control.

A recent survey by S&P Global Ratings of 121 insurers and reinsurers shows that 81% are prioritising automation and 71% are already applying AI to improve internal support functions. Half are focusing on customer service applications and 39% are using the technology for risk management tasks such as fraud detection and pricing. Despite this activity, 83% of respondents remain in the early or intermediate stages of adoption and only 8% have fully integrated AI projects across their organisations.

Insurers anticipate efficiency gains of as much as 7% and revenue improvements of up to 5% by 2028. The share of companies expecting AI related cost savings of more than 3% is projected to climb from 16% in 2025 to 80% by 2028. Operational benefits in claims, underwriting and customer service have appeared earlier and more visibly than financial gains, according to Andreas Lindberg, an analyst at S&P. So far the technology has not materially altered insurers’ profitability or credit ratings.

More than three quarters of survey respondents identified data privacy, security and regulatory compliance as major barriers to wider adoption. About 62% already maintain inventories of their AI models to monitor usage and associated risks. As the industry scales these tools, the central challenge remains ensuring that AI enhances efficiency and accuracy without transferring decision making authority over individual claims.