This article is by Jared Lesar, COO, Root
Artificial intelligence is reshaping insurance faster than many could have predicted. For carriers, brokers and MGAs operating in London, the carrot that has been dangled promises that AI can dramatically enhance customer outcomes, streamline operations and unlock new insights from vast pools of data. Yet, alongside this potential comes an equally important responsibility – ensuring that AI adoption remains compliant, transparent and aligned with regulatory expectations.
The regulatory environment in the UK is deliberately principles-based. The FCA and PRA have emphasised that existing frameworks – such as the FCA’s Principles for Businesses, the Consumer Duty, and the Senior Managers and Certification Regime (SMCR) – apply to AI-enabled processes. While there is no bespoke AI legislation, firms are expected to manage risks around fairness, transparency, explainability and accountability. For insurers, who often operate across multiple products and jurisdictions, these requirements provide a framework for responsible innovation.
Transforming operational efficiency
From my perspective, one of the most transformative applications of AI in insurance is operational efficiency. Underwriting, claims handling and risk assessment are all data-intensive activities where machine learning and predictive analytics can reduce manual effort, shorten cycle times and improve accuracy. AI models can surface patterns in claims data, highlight emerging risks, and even help detect potential fraud faster than traditional methods. This is not about replacing expertise, but augmenting it, freeing human teams to focus on the more nuanced decisions that matter most to customers.
Beyond efficiency, AI has the potential to enhance customer experience at scale. Consumers increasingly expect seamless, personalised interactions, whether applying for a policy, adjusting coverage, or submitting a claim. AI can power intelligent workflows and predictive tools that deliver faster, more transparent responses. It can also help insurers better understand individual customer journeys, providing insights that guide engagement and improve satisfaction. For the industry, this is a powerful way to meet the FCA’s Consumer Duty, which emphasises acting to deliver good outcomes for customers consistently.
However, AI is not a silver bullet. Without proper governance, model monitoring, and data oversight, there is a real risk of bias, discrimination, or decisions that cannot be justified to regulators. In practice, compliance should not be treated as a hurdle – it is an integral part of responsible AI adoption. Explainable AI, audit trails, allowing for a “human-in-the-loop”, robust testing and continuous monitoring are essential components of any deployment strategy. They allow insurers to innovate confidently while remaining accountable to customers, regulators, and stakeholders alike.
Providing personalised solutions
Looking at AI through a strategic lens, the benefits extend beyond operations and service delivery. Predictive insights enable smarter product design, more dynamic pricing and more responsive risk management. They help organisations identify underserved segments or emerging exposures, allowing insurers to create solutions that are more relevant, personalised and rewarding for customers. In this sense, AI is not just a tool for efficiency — it is a catalyst for growth and differentiation, provided it is applied responsibly.
Ultimately, the key lesson for the London insurance market is that innovation and compliance are not mutually exclusive. Regulators expect firms to be accountable, but they also recognise the value of technology in improving outcomes for policyholders. Organisations that embed compliance into the design of AI processes, rather than treating it as an afterthought, will be best positioned to harness the full potential of these tools.
AI presents an exciting opportunity for insurers to rethink how they operate, serve customers, and manage risk. But the promise of AI can only be realised if it is deployed thoughtfully, transparently and ethically. By staying grounded in principles, investing in robust governance, and keeping customer outcomes at the centre of every decision, the London market can unlock the benefits of AI while maintaining the trust and confidence that insurance relies upon.
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