Insurance companies are beginning to look toward the next phase of AI adoption with agentic AI and automation, according to Chris Newman, CEO of ACORD Solutions Group, at this year’s InsurTech Connect conference in Las Vegas.

However, as AI moves further into insurance decision-making and business operations, insurers need confidence in the data supporting the technology.

“I think AI undoubtedly is capable of making very good decisions and evolving things as we’re all seeing in businesses today,” he said. “But the challenge comes with the trust element in terms of can you trust your data.”

This means questions of where the information originated, whether sources are verified, and if a carrier can account for how decisions are made, he said. Newman stressed the need for verified data sources as insurers consider giving AI a greater role in carrying out business functions. Without reliable information, a company risks making decisions that it cannot adequately explain.

“The last thing you want from a regulatory point of view is to have decisions being made by a black box and you can’t then justify why that’s been done,” he said.

The need to demonstrate how decisions are reached could become more pressing as regulators scrutinize insurance applications of AI, he suggested. Regulators may not go so far as to prescribe the exact methods carriers must use, but insurers should anticipate being asked to provide evidence and accountability for their processes.

“To support the regulatory side and the compliance side, it’s really important to have that trust layer,” he said. “And then once you’ve got that base layer, obviously AI then comes into its own from the agentic point of view.”

Balancing Automation and Oversight

Newman said getting the harmonization between AI technology and human oversight correct comes down to verified data and keeping a human in the loop.

“There are the guardrails that are needed,” he said. “I think that’s going to be required, and it’s a sensible thing to have in place rather than to automate everything without those guardrails in place.”

However, insurers are facing another barrier that stems from the tech environments they already have.

“So many of the insurance companies that we’re talking about, particularly in the U.S., have spent incredible amounts of money either building their own systems or acquiring policy administration systems,” he said. “In some respects, they need to preserve their investment in their systems. They’ve spent a lot of money. They’re not just going to change those systems overnight.”

Newman described ACORD Solutions Group’s role as helping different systems communicate and converting data into trusted sources and formats that other participants can use. Instead of insisting that every organization migrate to a single new platform, the aim is to accommodate varying levels of digital maturity. He characterized this approach as building “a bridge between the old world and the new world.”

“It’s the difference of putting a brand new platform out there and saying everybody’s got to move to that new platform, which is a major, major change program,” he said. “We’re creating that bridge between the old world and the new world, which means anyone can get involved and digitalize their organization regardless of their level of digital maturity.”

This offers a way to establish a digital foundation now while preserving the option to change platforms later, he said.

“And then when you’re in a position to change your platform or change your system, if you choose to, you’ve already got that base layer there of digitalization,” he said. “So, it’s really looking to operationalize the standards, bring in that trust layer, but effectively remove a lot of inefficiency that’s in the industry at the moment, particularly for insurance companies.”

Rethinking the Operating Model

Larger change across the industry may come when carriers stop viewing AI as a way to automate individual tasks and start using trusted data to reconsider entire workflows, he added.

“The more forward-thinking carriers are starting to look at their end-to-end operating model. So they think, ‘Okay. We’ve got the base layer now, so I can now start to really look at how business could be done if it wasn’t constrained with some of these legacy processes.”

He said some insurers have already conducted tactical experiments involving smaller transactions. For Newman, the shift from “hype to actual real implementations” is only the beginning. The next opportunity, as he described it, is to decide which processes still make sense, which can be redesigned, and what trusted information needs to be in place to support that change.

“Some organizations are starting to step back and say, ‘Okay. We understand our business, but this is how some of the processes have been put together. How would we like them to really work? How does the business flow to us from our agents, from our distribution channel?'” he said. “They’re starting to re-engineer their operating models so they end up with this new digital operating framework. And I think that’s the real exciting opportunity that you can move to.”