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With AI quickly becoming a fixture in the insurance industry, carriers are scrambling to better understand the technology and adapt it to their business models.
The global AI in insurance market is experiencing substantial growth and projected to reach $10.27 billion in 2025, attributed to data explosion, risk assessment and underwriting, fraud detection and prevention, customer experience enhancement, operational efficiency and cost reduction.
Joe Khoury is a managing director and partner on the insurance practice at Boston Consulting Group. PropertyCasualty360.com recently spoke with Khoury about AI’s adoption into the insurance sector and how it might change the industry in five, 10 and 15 years.
PropertyCasualty360.com: How is AI reimagining underwriting? What can insurance carriers do with the gains in efficiency? Pass on to customers?
Khoury: AI is reimagining underwriting by enabling the integration of unstructured data—such as customer behavior, third-party sources, and digital interactions—into real-time risk assessments. It significantly improves efficiency, with gains of up to 36% in complex lines, and can reduce loss ratios by as much as three percentage points. These improvements allow underwriters to shift from routine assessments to strategic and judgment-based work.
AI also brings greater consistency and transparency to underwriting decisions by reducing subjective bias and relying on data-driven models—especially valuable for complex or emerging risks like cyber and climate. Insurers can leverage these capabilities to shift from reactive to proactive risk selection, identifying and pricing risks earlier in the customer journey—sometimes even before a formal quote is requested.
The resulting efficiencies can be reinvested to offer more competitive pricing, develop personalized products, enhance digital experiences, or increase profitability. Ultimately, this can be passed on to customers through faster service, better coverage, and reduced premiums.
PropertyCasualty360.com: How is AI transforming customer service?
Khoury: AI is reshaping customer service with tools like AI-powered knowledge assistants, which provide real-time support to agents and drive productivity gains exceeding 30%. These tools streamline information retrieval, automate routine inquiries, and enable 24/7 support through virtual agents—making customer interactions faster, more accurate, and more satisfying.
Beyond efficiency, AI is powering emotion-aware technologies that tailor responses based on customer tone and sentiment—bringing greater empathy to digital channels. Leading insurers are also implementing “next best action” systems, which guide agents in real time to upsell relevant coverage, de-escalate potential issues, or personalize communication. These AI-driven tools help boost customer satisfaction, improve Net Promoter Scores (NPS), and increase retention.
PropertyCasualty360.com: Can AI offer real-time resolution of simple claims? If so, what are insurance companies doing with the savings in operational cost?
Khoury: Yes, AI enables real-time resolution for up to 70% of simple claims through end-to-end automation. Technologies such as computer vision, natural language processing, and machine learning allow insurers to assess damage, validate coverage, detect fraud, and issue payments in minutes—reducing operational costs by 30% to 50%.
These systems also improve fraud detection, using behavioral analytics and anomaly detection to flag suspicious patterns early. As a result, AI-driven claims platforms are not just faster—they’re more secure.
Insurers are reinvesting the cost savings to improve digital self-service platforms, fund proactive engagement tools like risk alerts and preventative guidance, and enhance overall claims accuracy and responsiveness. Many are also shifting from being mere “payers of claims” to partners in protection, using IoT-enabled tools—like smart leak detectors, driving apps, or home sensors—to help customers avoid losses in the first place.
PropertyCasualty360.com: What is AI-led 'smart migration' and how does it transform IT into a growth engine?
Khoury: AI-led 'smart migration' refers to using AI to modernize legacy systems by transitioning them to modular, cloud-based architectures. This automates key elements of digital transformation—like code translation and data mapping—reducing technical debt and streamlining operations. As a result, IT evolves from a cost center to a growth enabler, giving insurers the speed and flexibility to roll out products faster, react to market shifts, and integrate with partner ecosystems.
Smart migration also empowers rapid product experimentation through low-code/no-code platforms, allowing insurers to test and launch new offerings in weeks instead of months. Additionally, it strengthens ecosystem integration—enabling seamless collaboration with external platforms such as fintechs, health tech, and mobility services—unlocking new distribution models and customer value.
PropertyCasualty360.com: Describe an insurance company in five, 10, and 15 years. What will they look like? What human positions might be affected by AI, automation and other technological innovations?
Khoury: In five years: Insurance companies are likely to have AI embedded across underwriting, claims, and customer service. With productivity gains over 30% already observed, roles involving routine or manual processing—such as claims intake or policy administration—may start to decline, as automation takes over more standardized functions.
In 10 years: As smart migration modernizes IT infrastructure, insurers will become more agile and digitally enabled. Customer interactions will be increasingly personalized through AI insights. Roles that support standardized processes may evolve or diminish, while demand rises for talent in AI oversight, digital product management, and customer experience design.
In 15 years: AI may handle the majority of straightforward underwriting, service, and claims tasks, resulting in a more tech-augmented, streamlined workforce. Roles in compliance are likely to shift toward AI governance and ethical risk management, ensuring algorithms are fair, transparent, and regulatory-aligned. The traditional concept of an “insurance company” may blur, as insurance becomes embedded in platforms like mobility services, e-commerce, or smart homes—requiring talent with the ability to work across industries and ecosystems.
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