For insurers, artificial intelligence has entered a more complicated chapter: the implementation phase.

While organizations are focused on how using it can drive efficiency and improve business outcomes throughout the enterprise, consumers are now taking a more critical look at how the technology is being used and the true impact it’s having. In the insurance world, that scrutiny is especially acute: only 43% of consumers trust their insurers to use AI responsibly in ways that actually benefit them.

Trust, always the bedrock of the insurer-policyholder relationship, now feels more fragile than ever. The challenge for insurers isn’t simply to adopt AI, but to harness it in ways that reassure, empower, and restore confidence. To meet these rising customer expectations, insurers should prioritize the following:

1. Be transparent about when and how AI is being used

Policyholders place a considerable amount of trust in their insurers when sharing sensitive personal and financial information with them. The same is true regarding decisions about policy changes, claims, and disputes, all of which have real consequences if made incorrectly or without expertise.

Trust becomes even more important when incorporating AI. In fact, 85% of consumers in 2026 say insurers should disclose when they use AI in customer interactions. That expectation makes transparency a business imperative, not just a best practice. Insurers should be clear about where AI is being used to enhance the customer experience, what role it plays, and when a human will step in. Setting these expectations upfront gives policyholders the visibility they want while reinforcing confidence that AI is being used thoughtfully and responsibly.

As with every interaction, people are more comfortable when they know what to expect. Proactively communicating how AI is used helps reduce uncertainty, build confidence, and strengthen trust throughout the customer relationship.

2. Use AI where it adds value

However, transparency alone isn’t enough. Organizations need to be intentional about where and why they deploy AI in customer communications, ensuring it adds value, rather than simply automating as much as possible for the sake of it. Recent data shows that 38% of consumers find AI-powered tools helpful in resolving questions or completing tasks, and 48% believe a human should always review content suggested by AI.

These findings point to an overall misuse of AI; however, AI can make a positive difference in a few key areas:

• Accelerating response times
• Providing more accurate information
• Summarizing and explaining complicated language
• Improving personalization of communications

Knowing where not to use AI is just as important as knowing where it adds value. High-stakes and complex communications, like interactions involving specific claims, coverage disputes, and policy changes, require human expertise, judgement, and empathy to meet customer needs. In these meaningful moments, insurers need to make sure it’s explicitly clear that an expert will take control.

When used thoughtfully, AI allows teams to spend less time on administrative tasks and more time focusing on complex decisions and customer relationships, but it should never take over the insurer-policyholder relationship completely.

3. Use secure, governed AI

Safety and security remain among policyholders’ biggest concerns. A recent survey found that just 39% of consumers are confident in AI’s ability to handle their information securely, highlighting a significant trust gap for insurers to close. Building trust starts with transparency; insurers must clearly communicate how customer data is protected, what safeguards are in place, and how sensitive information is handled throughout every interaction. By ensuring these protections are visible, insurers can reassure policyholders that AI is being used responsibly and securely.

Effective AI governance begins with defining clear guardrails around how AI operates. Organizations need to establish what data AI can access what actions it is authorized to take and where human oversight is required—especially when dealing with sensitive information. When these guardrails are built into AI from the outset, insurers can innovate with confidence while giving policyholders greater trust in how AI is used throughout the customer experience.

At its core, communication is the foundation of lasting relationships between insurers and policyholders. AI, when deployed with care and clarity, holds the promise of making those connections more efficient, more personal, and more responsive than ever before. However, capitalizing on this potential hinges on how well the technology is implemented.

As the industry stands at this crossroads, the real question is not how much AI can do, but whether it can help insurers earn and keep the confidence of those they serve.

Featured image: AI-generated (ChatGPT)