The insurance industry is continuing its technological transformation utilizing Generative artificial intelligence (AI), according to a new report analyzing its uses in the industry.

The results of a new study: “Transformative AI Technology: Insights,” released by Conning surveys C-suite executives and decision makers on AI adoption in the insurance industry.

Nearly two thirds of respondents indicated they are using large language models in sales and underwriting and based on others intending on adopting the technology, it appears it could become the most widely adopted technology in operations.

Along with the benefits of AI to the insurance industry, such as improved customer service and risk mitigation, comes challenges. The Conning study summarizes three challenges insurers will have to overcome including, ethical considerations, regulatory compliance and data security.

The survey delved into what technologies insurance executives are curious about. AI, mitigation, marketing, workflow, automation were noted as areas of interest.

Executives were also asked about the downside of using this type of technology. AI, consumers, generative, transition, repricing were some areas noted.

Conning forecasts that AI will continue to trend for the next 18 to 24 months.

“This is our second-year surveying industry executives on technology transformations and this year’s results show 77 percent of the respondents indicated that they are in some stage of adopting AI as part of their value chain, this is up 16 percentage points from 61 percent in 2023,” said Manu Mazumdar, a director and head of Data Analytics and Insurance Technology in Conning’s Insurance Research group.

The overwhelming amount of diverse data being collected by insurers now hinders their profitability, Conning said. AI is seen as a solution to this problem.

So long as insurers stay abreast of applicable regulations and data privacy issues, the industry is on the cusp of a great transformation but it will require a significant investment in time and resources leading to “upward pressure on expense ratios over the near-term with Generative AI driving the shifts in the type of staff and positions needed to run a modern insurance company.”

“Insurers are adapting, developing, and piloting innovative AI applications in pursuit of greater efficiency to drive customer and distributor satisfaction. In addition, insurers have access to a wider and larger selection of data than ever before and AI is a crucial technology in managing that data,” said Scott Hawkins, managing director and head of Insurance Research at Conning.