Equisoft and Universal Conversion Technologies (UCT) have commissioned industry association LIMRA to survey insurance carriers in an effort to determine the industry’s readiness for artificial intelligence (AI) and give insurance carriers the ability to evaluate their data readiness and data modernization investment priorities. It says the responses to the group’s research paint a picture of an industry on the verge of taking an unprecedented technological stride forward.

Entitled Assessing Data Readiness for AI in the Life Insurance Industry, the report found that 78 per cent of respondents from around the world believe data readiness is the biggest challenge in getting value from AI systems; 46 per cent of respondents say they aren’t ready to implement AI. They say in particular, data governance, data literacy and data integrity are areas around the world which continue to require improvement.

"Data is foundational to everything a carrier does, now and in the future. But carriers aren't necessarily data ready for AI because they haven't yet considered a holistic view of their data practices. Data quality and integrity are still work-in-progress," says Mike Allee, president of UCT. "Insurers have done a good job building their data infrastructure and are making progress on aligning data strategy with business objectives, (but) many have yet to realize AI's vast potential because their data practices aren't fully aligned with their AI strategy and therefore aren't fully mature. You can't be AI ready if you're not also becoming data ready." 

Canada scored lowest  

The report looks at organizational alignment, infrastructure, sourcing and integration of data, quality and integrity of data and governance and analytics. Canada scored lowest regionally by one point in the survey. Infrastructure was noted as the country’s strongest dimension while sourcing and integration of data were areas in need of improvement. The association’s research included responses from 11 carriers in Canada – the highest number in the study, followed by nine in the United States and eight in Australia. In Canada, 73 per cent of the companies surveyed were considered progressive, while 27 per cent were maturing. 

“High quality data is the bedrock of any AI initiative and, without it, the outputs of AI systems will be fundamentally flawed,” adds Kartik Sakthivel, vice president and chief information officer with LIMRA and LOMA. “It is imperative that organizations prioritize data governance, quality and integrity.” 

Machine learning 

According to the study, 87 per cent of respondents globally are currently using AI in some capacity. “Machine learning is the most widely adopted AI technology, with rapid future growth expected for natural language processing and large language models,” they write. “Data governance is also a significant area of concern, with many reporting that governance guidelines have been created but adoption and accountability are low. This is clearly an opportunity for progress globally.” 

They add that carriers that have already implemented AI are now encountering project challenges in scaling and in dealing with the erroneous assumptions made during planning.

“Insurers don’t need convincing about the massive potential AI holds for creating efficiencies,” the report states. “We are convinced that creating a superior data foundation that supports new and emerging technologies is a critical and commonly shared priority.”