Insurers lag on AI as only 7% call themselves transformative

IDC says adoption is accelerating yet data maturity and governance still trail business demands.

Only 7% of insurers consider themselves “transformative” in artificial intelligence (AI) adoption, whilst 14% still operate with siloed data infrastructures that slow innovation.

Insurers are moving cautiously on AI adoption, despite growing expectations that AI will deliver stronger business value in the year ahead, according to a new SAS-commissioned report by IDC.

The Data and AI Impact Report: The Trust Imperative found that trust remains a key issue. Users tend to place more trust in generative AI than in traditional AI tools, but this confidence is not always matched by strong governance and data controls.

Investment plans also remain conservative. Only 8% of insurers expect to increase AI spending by at least 20% over the next year, whilst nearly 60% anticipate a rise of between 4% and 20%. 

Around one-third expect minimal growth of 3% or less, or even a reduction in spending.

Trust gaps are another concern. Just 9% of insurers reported having both high trust in AI and strong capabilities to support trustworthy AI. 

More than 40% fall into categories where they either underuse reliable systems due to low trust or over-rely on AI tools that are not fully proven. 

More than half of insurers cited weak data governance and fragmented data foundations as major barriers, and 44% pointed to a lack of specialised AI talent.

The report said insurers are at an inflection point, with AI use accelerating but data maturity and governance still lagging.

Kathy Lange, research director for AI and automation at IDC, said the insurance industry is broadly in line with other sectors on trustworthy AI, and in some cases slightly ahead. 

However, she said insurers trail other industries when it comes to the maturity of AI and data infrastructure, limiting their ability to scale AI across the business.

The study showed that insurance has the lowest overall AI maturity amongst the four sectors analysed, which also included banking, government and life sciences.