Life insurers are rushing to take advantage of the potential of artificial intelligence

When its impact is considered in one word, artificial intelligence equals efficiency.The insurance world is full of tasks that can be made more efficient, from customer service to the back office.So it's no surprise that AI is a natural fit for life insurers.

Eighty-two percent of insurance executives say artificial intelligence is a top priority at their companies, according to a Roots survey this year.Over 90% of insurers are actively researching, testing or using AI capabilities, The Adoption of Artificial Intelligence in Insurance 2025 study finds.

Integration is moving so fast that regulators can't keep up.To date, the main regulation drafted by the National Association of Insurance Commissioners (NAIC) in the US is a model bulletin on the use of AI, adopted in December 2023. Twenty-four states have adopted the bulletin so far.

As former chair of the NAIC's Committee on Innovation, Cybersecurity and Technology, Kathleen Biran led the effort to create the newsletter.Biran was the insurance commissioner for the state of Maryland at the time, and has since returned to the private sector as an attorney specializing in insurance and artificial intelligence.

Two areas of change

Insurers see two main areas of change from the integration of artificial intelligence, Biran told InsuranceNewsNet.First, there are the many ways in which artificial intelligence is making processes more accurate and efficient incrementally.Then there are the ways in which artificial intelligence is "completely transformative".

"It allows companies to do things, think about things, set prices and develop products in ways that they haven't really been able to do as effectively before," she adds.

While more than 90% of insurers are actively exploring, testing or using AI capabilities, only 22% of insurers have successfully implemented AI solutions, Roots research finds.

Mike Upchurch is Vice President of Financial Services and Insurance Strategy at Domino Data Lab.Artificial intelligence is slowly making its way into the insurance workflow, he says.

"We are seeing artificial intelligence move beyond back-office automation to core insurance functions such as risk pricing and claims triage," he explains."The real creative use isn't just building these models; it's the continuous, automated validation that runs underneath them. This ensures that the models are always responsive to new market signals and, crucially, don't 'veer' off course and start to misjudge risk."

Faster and fairer

As insurers navigate the relatively early days of AI integration, they are finding huge returns.One area is uncovering the good qualities and potential drawbacks of artificial intelligence is telematics.

Telematics refers to technology that collects real-time data about vehicle use and driving behavior – such as speeding, braking, acceleration, turning, time, mileage – location and sometimes vehicle diagnostics.

In the commercial vehicle space, 82% of insurers report using telematics – up from 65% in 2023. Over 70% of fleets report fewer crashes and fewer claims after implementing telematics combined with driver training.

"Then there's mobility data about how you drive, where you drive, and literally how often you stop, and all the things that are actually probably more predictive of risk," notes Biran."In a way, it makes car insurance and pricing significantly more accurate, more efficient and fairer."

But not without controversy.Users often don't realize how much data is being collected or who has access to it.Skeptics argue that telematics data may inadvertently reflect socioeconomic or geographic biases.

For example, drivers in congested or urban areas may brake or accelerate more often - indicators that could be interpreted as "riskier" behavior, even though they are just driving in traffic.

Legal issues

Biran now practices law at DLA Piper, where he is a partner and leads the US insurance regulatory practice.She mentions three legal things that insurance companies should focus on when it comes to artificial intelligence:

• Risk management and control. Good management can protect insurance companies from costly class action claims.These AI policies continue to evolve as the rules evolve, Biran notes, but it's critical to know what regulators expect;
• Develop a testing protocol. This is a complex and delicate area.Even states like Colorado, which passed a law in 2021 addressing the need to test insurance and pricing models that use external data, are struggling to determine appropriate testing protocols, Biran says.“There are companies trying to develop responsible review and validation practices that deliver meaningful results without putting them at greater legal risk than if they had done nothing,” she adds;
• User data. States are paying more attention to laws regarding the collection, storage and protection of user data, with particular emphasis on user consent at the time of collection.As insurers develop AI-based solutions, the extraction and use of data, including intellectual property considerations, are important.Companies need to be aware of when and how AI development and implementation intersect with consumer data laws, Biran says.

With the development of integrated AI systems, insurers are developing their own data, but also buying and aggregating it from various sources.Understanding third-party liability under different regulatory regimes is critical, notes Biran.

Jeff Wilcoxon, senior director of strategy and corporate development at VIU by HUB, says the insurance industry cannot forego the human element when engaging with artificial intelligence.

"We believe that understanding what makes us human and complementing it with technology is what leads to the best customer experience. We explore how artificial intelligence can help us improve the efficiency and effectiveness of our consultants, while keeping the human connection at the center of everything we do."

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