Ignoring AI Is Risky Business for Insurance CEOs

Insurers have infrequent interactions with their customers and thus have limited data on which to base their underwriting, pricing, and claims decisions. More-AI-oriented industry players, such as insurtechs, have gotten around this by putting digital and data at the core of their business models. These startups, run by digital natives, have had early success in some markets, such as auto and home insurance. The amount of money flowing their way suggests that they have the confidence of investors, who clearly believe in AI's ability to disrupt the industry and capture a fair share of its profit pools. Insurers hail from a tradition steeped in data of a different sort: historical and static data that comes from claims databases and underwriting questionnaires.