Artificial intelligence (AI) is reshaping the insurance industry at a rapid pace. From streamlining claims processing to refining risk assessment, AI-driven technologies are transforming workflows that have remained largely unchanged for decades.

But while the potential of AI is undeniable, a critical issue is standing in the way of progress: a profound lack of trust in these systems among Underwriters and Actuaries.

Without addressing this trust gap, insurers risk missing out on AI’s biggest benefits. The firms that succeed will be those that position AI as a collaborative tool rather than a replacement, balancing technological innovation with the expertise and judgment of seasoned professionals.

The AI confidence crisis in insurance

AI investment in insurance is soaring. By 2025, nearly every insurer will have integrated AI into their operations, and one in ten will have scaled their efforts in key areas such as distribution, claims handling and risk modeling. But despite this momentum, not everyone is on board.

The 2024 State of Pricing Report paints a stark picture: 86% of Actuaries and 74% of Underwriters feel unprepared to navigate AI-driven tools due to limited technical skills. This lack of confidence is more than a minor inconvenience. It’s a fundamental roadblock to AI adoption at scale.

The competitive advantage of AI-enabled firms

But why should insurance firms care about AI adoption at scale? Well, it brings huge benefits in the way of:

• Faster, more accurate claims processing
• Enhanced risk assessment (with predictive analytics)
• Personalized insurance products
• The ability to unlock entirely new revenue streams

Number-wise, financing for insurance technology firms grew by 40% in 2024, driven by investments in AI-focused businesses. Meanwhile, by analyzing vast amounts of data and turning it into hyper-personalized insurance offerings, AI tools can help firms generate 40% more revenue. The list goes on, but already, the tangible benefits of AI-enabled firms are clear.

Beyond operational efficiency and financial gains, AI adoption is fast becoming a powerful magnet for top talent, signaling a firm’s commitment to innovation and career development.

Skilled Actuaries and Underwriters want to work for organizations that equip them with future-proof skills, rather than leaving them behind as automation advances. By embedding AI initiatives into their talent strategy, insurers position themselves as forward-thinking employers of choice, offering professionals a career path that evolves with the industry.

For insurance companies, the question shouldn’t be whether to adopt AI (because you must). It’s how to do so in a way that maximizes its impact. To do that, you need your staff to trust it.

Why AI must be framed as a partner, not a replacement

One of the biggest fears surrounding AI in insurance is the misconception that it exists to replace human decision-makers. That’s not the reality. AI’s true value lies in its ability to enhance human expertise, such as by flagging anomalies, identifying patterns and running complex risk scenarios at speeds no person could match.

But at the end of the day, final decisions must remain in the hands of experienced professionals.

Actuaries and Underwriters bring something to the table that machines simply cannot replicate: professional judgment. AI can process data, but it can’t weigh nuanced, real-world variables the way a skilled Underwriter can. It can identify risk factors, but it can’t interpret them with the same depth as an Actuary who understands the wider market context.

The first step to destigmatizing AI is to position it as an assistant, supporting human expertise rather than replacing it. The next step is to make it less opaque.

The role of transparency and upskilling in building trust in AI

One of the primary reasons insurance professionals distrust AI is the lack of visibility into how it arrives at its conclusions. If an algorithm flags a policyholder as high-risk, but the Underwriter doesn’t understand why, it stirs skepticism, not confidence. In fact, less than half of Underwriters trust the recommendations generated by predictive analytics.

Transparency is key, and upskilling programs (tailored to Actuaries and Underwriters) are critical to providing it. Such programs don’t just focus on teaching professionals how to use AI-driven tools. They provide them with deeper insight into how these technologies work.

Why is this important? Because when Underwriters and Actuaries actually see how AI reaches its conclusions, they can engage with the technology more effectively, validating or challenging its findings rather than blindly following them (or ignoring them). This kind of transparency fosters trust, turning AI from a “black box” into a reliable co-pilot.

AI as a catalyst for growth, not a threat to jobs

A common – and fair – concern among insurance professionals is that widespread AI adoption will lead to job displacement. But it’s important to recognize that while automation will undoubtedly change roles, it won’t eliminate the need for human expertise.

If anything, AI will create new opportunities, allowing Actuaries and Underwriters to focus on higher-value tasks, not repetitive administrative work. For example, AI-powered risk models speed up policy assessments, freeing Underwriters for higher-value decisions, while in claims processing, AI handles routine cases so that experts can focus on complex disputes.

This is what life insurer TAL discovered when they implemented Microsoft’s AI-powered Copilot tool: 60% of staff felt more productive and the company saved a day’s work every week.

The path forward

The insurance industry is at a pivotal moment. AI presents an unprecedented opportunity to enhance efficiency, improve risk assessment and drive innovation. But without the confidence of the professionals who use these systems daily, AI adoption will hit a ceiling.

The future of AI in insurance is about empowering people. I see it this way: investing in these tools, and taking steps to bridge the trust gap, is more than a tech-driven necessity – it’s a sharpened edge in a blunt market, and a powerful recruitment and retention strategy.

Firms that recognize this will be the ones that lead the industry into its next era.

If you’d like to learn about more predictions for 2025 in the Insurance and Financial Services industries, you can download our latest report.