For the insurance industry, growth has long been a defining trait. Yet after a period of intense hyper-growth, the sector now faces a new imperative: achieving efficiency in an increasingly competitive landscape. Forward-thinking leaders are reimagining their operating models and investing in capabilities like Generative AI to stay ahead. Indeed, 74% of C-suite executives believe they must completely overhaul their operations to build resilience. With projected growth rates slowing from 21% to 11% between 2017 and 2024, boosting efficiency is Critical especially as companies juggle technological disruptions, organizational challenges, and evolving consumer demands.
The ripple effect of this shift toward efficiency extends beyond insurance, impacting software, platforms, and other businesses. Rapid changes in consumer preferences, such as the rise of digital services force traditional players to explore new revenue streams, modernize outdated strategies, and establish robust risk frameworks. Disruptive technology risks have soared since 2021, with 49% of Software & Platform executives reporting the growing impact in our 2024 Global Risk Study. As a result, risk management is quickly becoming a strategic lever that fosters both innovation and profitability.
Leaping into the Known Unknown of AI
Now, imagine stepping into the future of insurance through the eyes of Oliver, a customer in the year 2030. His digital personal assistant orders a self-driving vehicle for a cross-town meeting. Deciding he wants to drive himself, Oliver switches to “active” mode, triggering an immediate recalibration of risk by his mobility insurer. In real-time, he’s offered an alternate, lower-risk route along with a premium adjustment based on traffic volume and other variables. Even his life insurance policy, priced on a “pay-as-you-go” basis, updates automatically to reflect these changing conditions.
Later, when Oliver lightly bumps a parking sign, the car’s internal diagnostics and his personal assistant work together to assess the damage, file a claim, and dispatch a mobile drone for inspectionall before he even leaves the driver’s seat. While this scenario sounds futuristic, the underlying technologies advanced AI, real-time data analytics, mobile connectivity already exist today. As AI matures, insurance will move from a “detect and repair” model to “predict and prevent,” transforming every aspect of customer interaction, underwriting, and claims management.
Insurance and Technology Risks
Of course, every new technology brings its own risks and challenges. Research by KPMG shows that CEOs are acutely aware of these hurdles, with ethical issues surrounding AI decision-making and the absence of robust regulation topping the list of concerns. According to KPMG’s 2023 Insurance CEO Outlook, 52% of CEOs see these factors as highly challenging. Additionally, nearly two-thirds (64%) of respondents say that complex regulatory and tax developments have, to some or a greater extent, made them feel less confident about investing in new technologies.
Over 72% of CEOs agree that AI regulation should match the rigor of climate commitment regulations—which have steadily increased in detail and volume. As Mark Longworth, Global Head of Insurance Advisory at KPMG International and Partner at KPMG in the UK, emphasizes: “A robust regulatory framework for AI is needed that’s proportional to the risks. Regulation should not stifle innovation but safeguard usage.”
Risk Strategies Are Becoming Growth Strategies
In an era defined by emerging technologies, risk management plays a key role in unlocking profitability and long-term growth. Our data shows that 49% of Software & Platform respondents have noted a significant rise in disruptive technology risks since 2021, a clear indicator that companies must proactively address vulnerabilities. For insurance carriers, this means embedding rigorous risk strategies within product development from day one, ensuring compliance and safeguarding against breaches or regulatory pitfalls.
By viewing risk management not merely as a defensive measure but as a driver of innovation and operational efficiency, organizations can seize new opportunities without compromising stability. The true power of a well-rounded risk strategy lies in its ability to support ongoing transformation, streamline operations, and maintain consumer trust, all while fueling growth in an industry that thrives on foresight and preparedness.
People Are the Heart of Innovation
As much as technologies reshape the world, people remain the ultimate drivers of change. Creating a culture of innovation goes well beyond implementing new tools. It involves inspiring teams to think creatively about how to use them. For insurance companies looking to leverage AI and other advanced technologies, part of the focus should be on talent management: attracting individuals with the right technical capabilities while empowering existing employees to upskill and adapt.
One way to reduce apprehension around AI is to position it as a colleague rather than a threat. For example, an underwriting virtual assistant could tackle a high volume of cases far more efficiently than a solely human-powered approach and possibly with greater accuracy. By integrating these AI roles alongside human colleagues, insurance teams can better handle complex tasks, elevating both efficiency and value for the business. In this collaborative environment, human expertise and digital intelligence converge to redefine what’s possible.
From charting new frontiers with AI to balancing innovation against evolving regulatory demands, insurance leaders who embrace emerging technologies and the people who power them will be best positioned to thrive in this rapidly changing landscape. By treating risk as a growth accelerator, encouraging a culture of experimentation, and keeping people at the heart of innovation, the insurance industry can truly leap into the “known unknown” of AI and usher in the next era of sustainable success.