U.S. Insurance Industry Shows Signs of Resilience Despite Continued Headwinds in 2024  March 21st 2025

Most insurance companies will "fail the AI test": Lemonade CEO

Traditionally known for its slow and cautious approach to innovation, the insurance industry is undergoing a significant shift, thanks to artificial intelligence.

As insurers seek to improve efficiencies and enhance customer experiences, they are embracing AI and generative AI as transformative tools.

At the Insurtech Insights Europe conference in London this week, organizations trumpeted gains in AI innovation and integration. But for Lemonade CEO Daniel Schreiber (pictured), only a few firms will thrive in the longer term.

“I think that many companies will absolutely fail at the AI test,” Schreiber said during a keynote speech on Wednesday. “They'll fail at it for the same reason that most acquisitions fail. On paper, it all makes sense, but there isn't a DNA match and there's organ rejection.”

Cultural adaptation over technological integration

AI adoption requires cultural transformation, not just technological integration, according to Schreiber. Companies that fail to align their culture with AI advancements will struggle with implementation, leading to rejection, he said.

Agentech creates digital workforce for AI insurance claims workflow

An Oklahoma-based startup providing AI-based claims solutions can increase efficiencies and enable companies using the technology to provide swift decisions for their policyholders.

Agentech, powered by hundreds of agentic AI coworkers, significantly boosts claim processing efficiency, allowing desk adjusters and adjudicators to handle more than four times the number of claims without increasing labor costs.

The engine behind the system is Agentic AI, which has the ability to perceive an environment, receive a goal and carry it out while learning on the fly, as opposed to a template that has a bias, limitations in customization and can sometimes provide inaccurate results.

According to the company website, the AI is trained under specific guidelines and best practices to work alongside human adjusters.

The company was founded in 2023 by Robin Roberson of Oklahoma City and Alex Pezold of Tulsa, both of whom have extensive expertise in insurtech innovation. Roberson previously co-founded WeGoLook, pioneering the use of the gig economy in claims handling, leading the startup to a $36 million acquisition by Crawford & Company.

Roberson and Pezold are leveraging that experience to modernize the insurance claims process with Agentech.

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Kennedys IQ introduces AI for insurance risk

As insurers seek to improve accuracy and consistency in policy reviews and claims assessments, Kennedys IQ has introduced an artificial intelligence (AI) risk analysis solution designed to support decision-making.

The new tool, Kennedys IQ SmartRisk, integrates into the firm’s technology platform and aims to help insurers navigate complex coverage evaluations and liability determinations.

Unlike AI models that rely solely on probabilistic outputs, SmartRisk combines Large Language Models (LLMs) with Evidential Reasoning (ER) and Belief Rule Base (BRB) methodologies.

This approach is intended to provide a structured and auditable decision-making process, addressing concerns about the transparency of AI-driven assessments.

Kennedys IQ states that the system does not require extensive upfront data and can be configured for different lines of business, integrating into client systems within weeks.

Designed for claims professionals, brokers, and underwriters across global markets, including the London market, general and specialty insurance in the UK, Europe, North America, Latin America, and the Asia-Pacific region, SmartRisk automates risk assessments and policy analysis.

The Case for TPAs in an AI Claims Environment

Generative AI reshapes third-party administrators' role in insurance claims, creating challenges but also opportunities to serve carriers better.

While third-party administrators have a long history of serving the insurance industry and have bright prospects, they face a once-in-a-generation change: generative AI.

AI Incoming

Prognostications on the impact of AI are ubiquitous – with insurance claims ripe for transformation. Several opportunities exist for AI to enhance or redefine the claims process, such as:

• Fraud Detection

• Claims Prioritization

• Claims Processing

• Settlement

• Subrogation

While the possibilities are nearly endless, the trend is clear – AI is changing the nature of the claims business in a way that will affect the relationship between third-party administrators (TPAs) and carriers.

First, AI is changing the nature of claims administration by challenging where human interaction (and judgment) is needed. Simple claims will see auto-adjudication without the need for an adjuster. We are already seeing carriers experimenting with this approach in the event of simple auto claims where photos and documentation result in near-instant decisions.

Second, AI should have a deflationary impact on the cost of administering claims. Pricing assumptions to manage claims on behalf of another entity are largely driven by labor costs. AI will change this by creating capacity for claims personnel, achieving both margin improvement for the TPA and potential cost savings for the TPA's client.

Third, AI will affect non-claims administrative work, such as in the contact center. AI use cases are often focused on call deflection, but everything from workforce management to key contact center metrics (e.g., average handle time [AHT]) will be affected by AI, creating additional capacity and challenging key assumptions in the TPA model.

Chris Taylor is a director within Alvarez & Marsal’s insurance practice