Always got time for some insights from Oxbow;
Oxbow Partners have today launched a report entitled “Generative AI: The opportunity for specialty insurers and reinsurers”.
The report, based on interviews with senior leadership at 22 of the largest (re)insurers and specialty players in the world and described as “insightful” by the Lloyd’s Market Association, includes a range of insights:
- Gen AI will be “very transformational” in the long-term (5+ years): 19 out of 22 rated the long-term transformative potential of Gen AI as at least 7 out of 10
- Carriers are not advanced in their AI journey and gen AI is struggling for attention:
- All carriers are at the early stages of their AI journey; even the most advanced (3 of those interviewed) are still only building ‘strategic foundations’
- 80% cite “other strategic objectives” as the biggest barrier to Gen AI adoption
- Many are taking a deliberate “wait and see” position for now, making some investments in foundational capabilities, but scanning actively to see where others were making progress
- A range of use cases are being explored: There are three types of use case that span the entire (re)insurance capability model: increasing the efficiency of existing activities, extending or enriching existing activities, or substituting current ways of working
- 62% of carriers have also gone live with an internal chatbot or have one at a late stage of development
- Querying large datasets was the most commonly mentioned use case by our participants
- Incumbent carriers tend to be focused on expense ratio opportunities whilst newer players are more focused on loss ratio opportunities
- Carriers currently feel unprepared to embrace Gen AI across their operating model (average score of 5.2 out of 10):
- Leadership was the strongest capability highlighted (average of 6.3 out of 10) and as such is rarely seen as a major barrier; most exec teams are excited about Gen AI’s potential but want to see proven benefits before full buy-in
- The biggest concern is the talent gap (average of 4.4 out of 10), with fears of falling behind without the necessary expertise; to tackle this some use third parties whilst others are adapting recruitment, and almost all are training teams internally
- Governance is recognized as crucial, with clear executive ownership and senior leadership buy-in, but interviewees understood the risk of it becoming an “inhibitor instead of an enabler”
Miqdaad Versi, Partner, Head of Gen AI at Oxbow Partners and author of the report said: “The report backs up our hypothesis that Gen AI will be truly transformative for the industry. However, there is a lot of foundational work that must be done. Executive teams need to create a deliberate strategy for AI and Gen AI, consider how to set AI and Gen AI up in the business, and consider the AI and Gen AI angle on carriers’ transformation agendas and short-term priorities. We believe executives should think big, even if they are not yet ready to make the leap.”
Elizabeth Jenkin, Underwriting Director at the Lloyd’s Market Association, added: “Generative AI is one of the most talked about topics within the Lloyd’s market. It presents a unique opportunity for the specialty and reinsurance sectors to revolutionise their operations and products and while there are challenges to overcome, particularly around talent, governance and data, the potential benefits are substantial. It is crucial for the industry to lean into the discussions to stay competitive and innovative.”
The report can be accessed here: https://resources.oxbowpartners.com/generative-ai-report.
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