McKinsey finds insurers lagging peers miss out on AI-led gains

AI has led to 10% to 20% improvement in new-agent success.

Nearly all insurers have begun adopting artificial intelligence (AI), but few have fully embedded it into their business models, according to McKinsey & Company’s latest report, The Future of AI in the Insurance Industry. 

The study finds that whilst most insurers have AI projects in place, many executives admit their companies are not yet “AI native.”

McKinsey’s research shows that insurers leading in AI integration have achieved 6.1 times the total shareholder return (TSR) of lagging peers over the past five years (more than double the performance gap seen in most other sectors).

The consultancy notes that only a few insurers are realising the full value of AI across their operations, but those taking a domain-based transformation approach are seeing measurable gains. 

These insurers focus on revamping specific business areas such as underwriting, claims, pricing, and distribution, rather than deploying scattered AI use cases.

According to McKinsey, domain-level transformation has led to tangible results, including a 10% to 20% improvement in new-agent success and sales conversion rates, a 10% to 15% rise in premium growth, a 20% to 40% reduction in customer onboarding costs, and a 3% to 5% improvement in claims accuracy.

The report highlights six “signature moves” for insurers aiming to compete in the AI-driven era.

These include aligning the leadership team around a business-led AI strategy, strengthening in-house digital talent, adopting scalable operating models, using flexible and reusable AI technology stacks, embedding data capabilities across the organisation, and investing equally in change management and adoption.

McKinsey emphasises that AI adoption is not just a technical upgrade but a cultural shift requiring insurers to rethink how people and machines work together. 

The firm also notes that success depends on embedding AI into day-to-day operations, ensuring employees see AI assistants as essential tools rather than external systems.