CEOs in the commercial and specialty re/insurance industries must move beyond experimentation to develop the operating models, governance structures and decision-making capabilities needed to turn investments in artificial intelligence into competitive advantage, a new report from Oxbow Partners suggests.
Oxbow Partners’ new CEO Agenda report was written by partner Chris Sandilands and senior manager Oliver Watts, with contributions from Miqdaad Versi, Greg Brown, Manmeet Singh Bawa and Anthony Stevens. The report believes that AI will “create lasting advantage” in commercial and specialty re/insurance only if it enables leadership teams to make better judgments in complex, high-value markets.
Insurers are investing heavily in AI, but many have yet to determine how it can provide “a lasting competitive advantage” beyond efficiency gains, pilot programs or isolated use cases, the report said.
Oxbow Partners said artificial intelligence represents a step change in capabilities since 2023. Unlike previous transformation efforts, which focused on standardizing high-volume processes through automation and outsourcing, AI reportedly reduces the need for standardization and scale as a prerequisite for delivering value.
Oxbow explains that with the right information infrastructure, AI can democratize access to information and decision-making, empowering more workers to make smarter decisions autonomously.
The report also points out that AI’s competitive advantage will come from enhancing judgment on complex risks and investment portfolios, rather than simply automating tasks.
The company added that CEOs should go beyond productivity gains and assess how AI can reshape their organizations while ensuring they have the operating model, governance framework and data foundation they need to scale AI responsibly.
The companies that gain the greatest advantage will be those that embed AI into strategy and underwriting decisions, rather than simply running the most pilot projects, the report said.
“Artificial intelligence is not Insurtech 2.0. It is strategic, not tactical; core, not auxiliary. Artificial intelligence will change every industry, and insurance is no exception.” Oxbow Partners pointed out.
However, while AI has the potential to transform the industry, the company warns that it is not a panacea or strategy.
“If applied correctly, it creates value; if applied incorrectly, it creates costs. We remind CEOs that no matter what investors say, AI is a tool, not a religion,” Oxbow Partners concluded.
