Wipro sees 81% increase US spending on AI
The US insurance industry is actively embracing Artificial Intelligence’s (AI’s) potential, according to a report covering responses from 100 American companies with revenues surpassing US$500 million each.
The Wipro Limited (NYSE: WIT, BSE: 507685, NSE: WIPRO) report, “The AI Advantage: Building Tomorrow’s Insurance Enterprise”, shows US insurance firms look to leverage AI to transform their core processes.
AI is set to become a much bigger part of Information Technology (IT) budgets, with 81% of firms planning to increase AI spending within the next year and most firms looking to more than double AI budgets – from 8% today to 20% – in the next 3-5 years.
Almost all (92%) of respondents agree that AI is essential for maintaining their competitive edge in customer experience and personalization.
However, the findings point to a two-speed market, where larger firms lead AI adoption – with their robust governance frameworks and vast data resources – while many mid-sized and smaller firms face hurdles from legacy systems to limited AI expertise.
Underwriting is one of the main areas where insurers are aiming to derive value from AI. With its ability to process large volumes of structured and unstructured data, AI is increasingly helping insurers realize enhanced efficiencies and precision in underwriting.
While all insurers are working to integrate AI into the underwriting process, only less than half (46%) say they have extensively implemented AI systems into their underwriting workflows.
Looking into the future, insurers expect AI to transform underwriting, with 68% indicating that it will bring enhanced risk assessment accuracy and cost savings, 65% saying that it will enhance compliance with regulatory requirements, and 62% anticipating improved customer satisfaction and retention using AI.
One of the main challenges in AI adoption is external and internal risks, according to the findings of the survey. While AI enables faster and more accurate decisions, it also introduces risks of bias and reputational damage. Alarmingly, 21% of insurers – 44% of smaller firms – still lack formal AI usage policies, leaving them exposed to compliance challenges as AI regulations evolve.
Integration is another pressing concern for AI adoption in insurance, with 71% of insurers citing difficulties merging AI with legacy systems. In tackling this challenge, most (65%) firms are adopting a phased approach to implementation to mitigate risk and ensure smoother integration.
Inter-departmental collaboration is emerging as a top priority as firms look to reap the maximum benefits from AI implementation. Forty-one percent of firms say that they are reinforcing cross-functional collaboration between AI experts and underwriters.
Meanwhile, almost half (47%) of the respondents say they are investing in upskilling their workforce and hiring AI talent to ensure they have the right skillset for an AI-first era.
“AI adoption is no longer optional, it is essential to future success,” said Ritesh Talapatra, Vice President and Sector Head for Capital Markets and Insurance, Wipro Limited.
“As firms that drive enterprise-wide AI adoption start to reap the flywheel effects, those slower to adapt will risk being left behind. Investing in a strong data, governance and technical foundation, and aligning AI initiatives to shared business objectives will be critical to success,” he said.
“For firms starting on the journey, prioritizing quick wins and investing in building the foundation necessary for scale will be the key.
“Ultimately, the industry will need to recognize that AI is not just an innovation, it is the new foundation of success in insurance,” added Talapatra. Fiinews.com
