Insurers need to be deliberate about AI investment

Three heads of AI shared their insurance companies’ strategies for delivering the greatest return from AI technology at a webinar hosted by U.K.-based AI benchmarking firm Evident AI on Wednesday.

The leaders suggested that carriers prioritize resources for business processes that stand to gain the most from AI, ensuring that underlying digital infrastructure is AI-ready. They also recommended being flexible with build-or-buy decisions as technology progresses.

“There’s this temptation … of just trying to declare progress by spreading AI everywhere, but it is a strategic choice to identify those use cases that create meaningful impact,” said Matt Gorman, senior-vice president and chief AI officer at Travelers Companies, Inc. in Hartford, Conn.

Find value for AI

AI’s predictive capabilities are maturing with more reasoning and end-to-end autonomy, said Alex Baldenko head of research and development at MassMutual in Hartford, Conn. “The unpredictability is in how those capabilities diffuse throughout industries to enable value creation.”

At MassMutual, senior leaders use “VC-type due diligence” to make investment decisions, Baldenko said. They look for the smallest capital and risk required to gather the most evidence for a particular process enhancement. “The key point here is starting with top-down conviction from senior business leaders, not just excitement about what’s cool with the most recent capability.”

Manulife prioritized its AI investment in six themes: underwriting, virtual assistants, software development, operations and workflow, advice and distribution, said Jodie Wallis, global chief AI officer at Manulife in Toronto. “Within those areas, we’re going to seek to build solutions that have relevance across many of our markets, businesses and functions to get the biggest bang for our buck.”

For example, Manulife first tested its distribution AI in Singapore in 2024 with basic functions like meeting preparation, Wallis said. Then it was rolled out to other markets, and new features were added in parallel, such as roleplaying AI coaches for new agents and real-time illustrations.

Infrastructure first

But getting to the point where insurers can build AI tools isn’t a simple process, Baldenko said. Carriers need to have the right digital infrastructure in place for AI to be effective. This means having data in the right format, strong governance and building trust with regulators and distributors.

“That’s the plumbing, and you simply can’t skip it. And once you have that in place, … you can drive opportunities such as underwriting and claims,” Baldenko added.

A good opportunity to make changes is at the natural end of software lifecycles, Gorman said. If change is already expected at those junctures, it helps build the organizational muscle to learn how to do things in a new way.

Build or buy?

If existing enterprise software like customer relationship management tool Salesforce and enterprise planning platform Anaplan already have built-in AI capabilities, Manulife wouldn’t need to spend resources building its own, Wallis said.

“We should take advantage of capabilities that are inherently built into software that we have chosen to rely on, but sometimes we have to wait until it’s available,” she added.

In cases where the right AI-enabled software doesn’t exist yet, Manulife uses a build first, buy later approach, Wallis said. Manulife develops its own capabilities where it needs them and transitions to buying software from vendors as the technology matures, sunsetting its own designs in nine to 18 months.

“We’re building a lot of those [AI] components now, but we do expect, over time, that those will become [commercially] available and we’ll take our valuable resources and start to build in other areas,” she said.

And when the tech is available, carriers should be flexible in choosing vendors, Gorman said, noting that Travelers is “deliberately agnostic when choosing platforms and providers.”

“Locking in on a single vendor is a risk, not a strategy,” he added.