Insurers Boost AI Investment as CEOs Aim for Faster Returns: KPMG
Insurance company chief executives are increasing their investments in artificial intelligence (AI) to enhance operational efficiency and expedite returns. A recent report from KPMG outlines this trend, indicating a significant shift in focus towards AI within the insurance sector.
AI Investments on the Rise
According to KPMG’s 2025 Insurance CEO Outlook, a significant 73 percent of insurance CEOs prioritize AI adoption as their foremost investment target. This is a clear indication that the insurance industry recognizes AI as a pivotal driver of value.
Budget Allocations for AI
The report reveals that 67 percent of these chief executives are set to allocate between 10 and 20 percent of their annual budgets to AI initiatives. This marks a notable increase in financial commitment compared to previous years.
Expectations for Returns
- 67 percent of CEOs expect returns from AI investments within one to three years.
- This represents a considerable rise from just 21 percent in 2024.
KPMG emphasizes that AI is no longer just an experimental tool. Insurance companies are actively integrating AI into their operations, moving from theory to practical applications.
Operational Enhancements Through AI
Insurers are deploying AI across multiple functions. Key applications include:
- Claims Processing: AI helps analyze and validate claims, accelerate approvals, and facilitate automated payouts.
- Algorithmic Underwriting: Insurers are leveraging AI to streamline the underwriting process.
AI is crucial for enhancing operational efficiency in customer-facing and back-office systems. Straightforward policies can now be completed online in mere minutes, while AI can auto-approve numerous claims by assessing images for severity and authenticity.
Concerns Over Regulation and Ethics
Despite the numerous benefits, many CEOs express concerns regarding the risks linked to AI deployment. The lack of regulatory frameworks raises ethical questions and potential issues with data readiness, security, and compliance. This could ultimately affect public trust in AI technologies.
- 77 percent of CEOs view the speed of regulatory progress as a potential barrier to success.
- The absence of AI regulation is regarded as the second greatest challenge facing AI implementation in their organizations.
As insurers continue to navigate these challenges, the focus on AI remains strong, with expectations for rapid advancements and substantial returns on investment.
