Generative AI is set to be a game-changer for the specialty and reinsurance sectors, according to a new report from Oxbow Partners, but are the industries prepared for its impact?

In a report titled “Generative AI: The Opportunity for Specialty Insurers and Reinsurers,” Oxbow Partners interviewed senior leaders from 22 of the world’s largest insurers and specialty players.

Key findings suggest that generative artificial intelligence (Gen AI) is expected to be “highly transformative” over the next five years, with 19 out of 22 respondents rating its long-term potential at least 7 out of 10.

Get the latest reinsurance news straight to your inbox twice a week. Sign up here

However, insurers are still in the early stages of their AI journeys, with even the most advanced insurers still only building the “strategic foundations.”

One of the main barriers to AI adoption is prioritizing other strategic objectives, cited by 80% of respondents. As a result, many telcos are taking a “wait and see” approach, making some investments in core capabilities while monitoring the industry’s progress.

The report identifies various use cases for AI generation, including increasing efficiency, expanding or enriching existing activities, and replacing existing ways of working. Notably, 62% of telecom companies have implemented or are developing internal chatbots, with querying large data sets being the most frequently cited use case.

Read more: Lloyd’s in dealing with risks and seizing opportunities in reinsurance

Meanwhile, existing carriers focus on opportunities to increase expense ratio, while new companies target opportunities to increase loss ratio.

Despite the enormous potential, telcos feel unprepared to integrate AI generation into their operating models, with an average readiness score of 5.2 out of 10. Leadership is seen as a strength, with an average readiness score of 6.3 out of 10. Executives are enthusiastic about AI generation, but seek proven benefits before fully committing.

The talent gap turned out to be the biggest concern, with an average score of 4.4 out of 10. To address this, some companies are outsourcing, adjusting hiring strategies, and training teams internally.

Governance is also recognised as essential, with clear executive ownership and buy-in from senior leadership. However, there are concerns that governance could become “inhibiting rather than motivating”.

“The report supports our thesis that next-generation AI will be truly transformative for the industry. However, there is a lot of groundwork to be done,” said Mekdad Versi, Partner and Head of AI at Oxbow Partners. “Executive teams need to create a thoughtful AI and AI-generation strategy, think about how to position AI and AI-generation for business, and consider the AI ​​and AI-generation angle in transportation companies’ transformation agendas and short-term priorities. We believe that executives should think big, even if they are not yet ready to make the leap.”

What do you think of this story? Feel free to share your comments below.

Get the latest reinsurance news straight to your inbox twice a week. Sign up here