There’s An AI Divide in The Insurance Industry – and The Window For Catch-up is Closing

This piece is by Alexandra Mousavizadeh, Co-CEO at Evident.

AI represents a seismic shift for people, businesses and the firms that insure them. What was once the distant promise of AI is now a competitive reality, and the success of firms in embedding this technology today will materially shape their future prospects.

For insurers, AI is no longer a question of if, but how and how fast. With real opportunities for those firms investing in the fundamentals of AI, and real risks for those who are unable to do so.

Our newly published Evident AI Insurance Index – which aims to provide the most comprehensive benchmark of AI maturity across the insurance industry – makes this picture clearer than ever. It shows that whilst most insurers publicly acknowledge AI’s potential, many are running into institutional barriers, and struggling to demonstrate tangible return on investment.

The pressure is on

Insurers today face a complex mix of compounding pressures. Rising CAT losses, inflation-driven rebuilding costs, and intensifying regulatory scrutiny are all reshaping risk portfolios and squeezing margins. The sector is already adapting: re-underwriting books, adjusting capacity, and reassessing market participation. But these defensive manoeuvres are reaching their limits.

AI is not a silver bullet, but it is fast becoming a critical differentiator. Our Insurance Index data finds that the most forward-leaning insurers are exploring how AI can enable more dynamic pricing, accelerate claims resolution, reduce fraud, and personalise distribution, capabilities that speak directly to today’s margin and retention challenges.

Failing to adopt and scale AI is becoming a missed opportunity and a strategic risk. Competitive pressure is building, not just from peers, but from digital entrants with lighter infrastructure and more agile data stacks. In a market where loyalty is low and churn is high, the ability to deploy AI at scale could mean the difference between relevance and retreat – a divide that’s already emerging, with Evident’s Index data showing the top 10 insurers pulling away fast from the rest of the field.

Bottlenecks remain – but the challenge is cultural, not technical

The barriers to scaled AI adoption in insurance are more structural than they are technical. The main pillars that influence successful implementation of AI in insurance, and indeed, in other sectors like banking, are leadership, transparency, talent and innovation.

Progress is being held back by a convergence of known constraints across these territories: fragmented infrastructure, siloed teams, and a cautious leadership culture grappling to connect AI investment with measurable business outcomes.

Many insurers still operate on legacy systems not built for the data intensity or integration demands of AI. Without foundational modernisation, deployment remains patchy and peripheral, regardless of how promising the models may be. Even the most advanced use cases can falter if not supported by the right infrastructure.

Leadership is another decisive factor. In firms where AI responsibility is distributed – or worse, ambiguous – momentum is difficult to sustain. The absence of visible executive ownership often correlates with a lack of internal alignment, external clarity, and ultimately, institutional confidence in scaling new capabilities.

And while a healthy degree of caution is intrinsic to the industry, the current moment demands more. Risk aversion must not become inertia. The insurers making real progress are those that recognise AI not as a discrete innovation, but as an enterprise-wide transformation requiring coordinated leadership, modernised systems, and investment in talent that can bridge both.

From pilots to production

The AI maturity curve in insurance is beginning to crystallise and the spread is stark. Most major insurers are now referencing AI publicly, but few articulate a coherent, enterprise-wide strategy. Fewer still disclose how AI is being operationalised, with only a tiny minority reporting any specific financial return from their AI investments.

This lack of transparency reflects a deeper challenge: in many firms, AI remains siloed, confined to R&D teams or standalone pilots, without integration into core functions like underwriting, claims, or customer service. The result is uneven progress and a growing risk of strategic drift.

By contrast, the leading insurers in our Index, such as AXA, Allianz, USAA and Intact Financial, are moving decisively. They are building enduring capability: embedding AI into frontline operations, recruiting specialised talent, and setting clear expectations for ROI. These are not experiments; they are structured, scaled programmes designed to give them a distinct commercial advantage.

For the rest of the market, the message is implicit but urgent: the window to catch up is narrowing.

AI’s impact will only grow

For insurers serious about AI, the path forward is no longer ambiguous. It’s about moving from intent to integration, from proof-of-concept to performance. That means embedding AI into the operational core – underwriting, claims, fraud, customer experience – where capability translates into competitive edge.

The firms leading our Index aren’t just investing in technology, they’re building the organisational architecture to support it. That starts with people. Recruiting AI specialists, reskilling domain experts, and equipping teams to translate technical potential into commercial outcomes. Without this focus on talent, even the best tools won’t scale.

Transparency is a vital and frequently overlooked area of capability. Clear public reporting on AI use and results remains rare across the insurance industry. This needs to change, not just to build trust with regulators and investors, but to drive internal accountability and momentum. Insurers that communicate openly about their progress are better positioned to lead.

Ultimately, the race for AI adoption and maturity is about setting the terms of future advantage. The firms that act now, with strategic intent, organisational clarity, and a commitment to transparency, won’t just outperform their peers, they’ll help define the standards by which the whole sector is judged.