By maintaining a parallel path between core insurance systems and an AI intelligence layer, the sector can innovate with a minimal risk burden, says Paul Wheeler, CEO, Sapiens.
The insurance sector is inherently conservative. You don’t work in a centuries-old market based on protecting key assets by throwing caution to the wind and few would want to work with insurers that risk all on a sketchy business plan or suboptimal systems. AI, though, is disrupting this traditional mindset. If insurers don’t invest in the transformative scenarios AI affords, they will join the elephant’s graveyard of organisations left behind. We are at the stage with AI where ‘analysis paralysis’ or taking an ‘after you’ approach is literally an existential risk.
Today, nearly all insurers will have tried AI but too many are moored in the pilot stage. They are bogged down because they are unconvinced by short-term results, the cost of investing, data governance and regulatory concerns, or the cultural change involved in adopting such a potentially powerful model.
The perfection paradox
The key word here is ‘trust’. Too many insurance leaders and decision-makers haven’t committed to AI because they don’t trust the technology. They want it to be perfect first.
In part, this is an issue of perception. CEOs read about AI hallucination and deem it unready for production environments at scale. Or they see a news item about a potential Armageddon scenario and stretch that understanding to incorporate their own risk profiles. Or else, they fear the reputational impacts of large-scale automation and re-engineering impacts on the workforce.
However, this is a ‘glass half-full’ viewpoint. Human beings make mistakes too. Technologies are neutral and can be put to positive and negative uses. And if leaders don’t make changes that are admittedly uncomfortable and disruptive to business as usual, then they will be discomforted by economic reality and forced to downsize anyhow.
It’s a little like a self-driving car: when it crashes, it is headline news, yet humans crash cars all the time. AI is not perfect but the advantages it offers are remarkable and with agentic AI creating legions of autonomous bots, the latest generation of the technology is capable of being the motor of business transformation.
Time to act
So, insurers need to commit to AI and invest in it accordingly with the ambition of creating substantive change and sharp improvements to key metrics, but also with the realistic expectation of some missteps and course-correction along the way.
Insurers seeking an exemplary template may look at the example of banking, an adjacent sector that has made technology-enabled leaps in capability. Banking has digitised and mobilised from end to end, and companies like Wise, Monzo, Starling and Revolut have disrupted banking models and changed the relationship consumers have with money and associated assets. Today, insurers face a similar conundrum to that which confronted retail banking 10 or 15 years ago: how to meet the challenge of their boards to use the latest technology waves and meet buy-side demands for compelling customer experiences while remaining compliant with regulations.
Technologists need to take insurers on a similar journey of enlightenment to show how to adopt AI at scale, safely.
The AI insurance brain
To mitigate risks and accelerate change, insurers need what I call a ‘brain’. That is, a software foundation of collective experience and knowledge built up over decades.
Just as the human brain is made up of a hyper-connected labyrinth of nodes and neurons to power understanding, comprehend nuance and detect risk, the institutional brain corrects AI when it is drifting or hallucinating.
My strong feeling is that the brain needs to be discrete from the core insurance Policy Administration System (PAS) platform to protect critical applications from rogue or undesirable activity, and to make those apps easily upgradable on an ongoing basis.
That separation of duties also ensures there is minimal risk in AI adoption. The core business continues just as it has always done, enhanced by continuous improvements. But it is augmented, super-powered even, by AI.
That paradigm is a great fit for insurers excited by AI but keen to maintain something akin to the Gartner notion of Bimodal IT where the innovation track is balanced in parallel by ongoing core operations management.
This form of AI/core separation is an elegant architecture for future-proofing the organisation. It protects against errors; creates an orderly model for deployment, maintenance and upgrades; mitigates the impact of security threats and creates a clear path for mergers, acquisitions or other major change activities.
Change is coming
Among progressive AI adopters I’m already seeing remarkable things happening. Products launching in weeks rather than several months. Strategic, auditable decisions made in a day, rather than several months. Claims processing in real time. Liberated employees spending
more time on customer success. IT becoming a true source of innovation and counsel on risk to the board. Even insurance becoming an advisor on preventative actions rather than providing the risk-bearing capital cover when accidents happen…
This then is the future of insurance but leaders need to understand that while technology is moving very fast it will never move this slowly again. Victory in the AI-augmented future will go to early adopters: the companies that embed AI to the point that it is a seamless aspect of culture but still retain a ‘church and state’ division between the core PAS and the super intelligence that feeds into it. Are you willing to lead the change?
About Paul Wheeler
Paul Wheeler joined Sapiens in December 2025 as Chief Financial Officer and a member of the Sapiens Board. Paul is a global executive, recognised leader and consistent value creator with 30+ years’ experience leading technology businesses, predominantly within the private equity environment. Paul has held previous CFO roles, including at Operative and Trema, and has also held roles as Senior Operating Partner at the private equity fund Francisco Partners, Managing Director at ION Trading and Chief Operating Officer at Efront.
With significant private equity experience, Paul has managed global teams and transformations, including large-scale change. He is a member of the Chartered Institute of Management Accountants.
About Sapiens
Sapiens is a global leader of AI-centric, SaaS-based insurance software, delivering hyper-relevant experiences that are efficient, compliant, and innovative. With agile intelligence, Sapiens’ solutions turn real-time data and human insight into precise action at every moment, across every risk. The Sapiens platform includes agentic workflows accelerating every capability across policy, underwriting, claims, reinsurance, decisioning, finance and compliance. With more than 600 insurers in over 30 countries running on Sapiens, our deep industry expertise is the foundation of our long-term relationships, from initial implementation through to modernisation and market transformation. Sapiens is headquartered in London, serving customers in property and casualty, life, reinsurance, specialty, and workers’ compensation from offices across North America, Europe, Asia Pacific and the Middle East including Israel where the company was founded. For more information, please visit Sapiens.com, or follow us on LinkedIn.
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