Wipro Limited, a provider of AI-powered technology services and consulting, has released a report which shows that AI spending is set to grow significantly within insurers’ IT budgets.
The study, “The AI Advantage: Building Tomorrow’s Insurance Enterprise,” surveyed 100 senior executives from US insurance companies with annual revenues above $500 million and reveals a clear trend: insurers are increasingly prioritising AI to transform their businesses.
While currently accounting for 8 percent of IT expenditures, AI investment is expected to rise to 20 percent within the next three to five years. In the short term, 81 percent of the surveyed firms intend to increase their AI budgets over the next year.
Almost all respondents (92 percent) agree that AI is critical to maintaining a competitive advantage in delivering personalised customer experiences.
However, the report points to a disparity in adoption: larger insurance companies, with stronger governance structures and richer data resources, are moving ahead more rapidly, while many mid-sized and smaller firms struggle with outdated legacy systems and a lack of AI expertise.
Underwriting is a key focus area for AI application. AI’s capability to analyse large sets of both structured and unstructured data is helping insurers improve efficiency and accuracy in underwriting decisions.
Despite these benefits, less than half (46 percent) of insurers have fully integrated AI into their underwriting processes. Looking forward, 68 percent expect AI to improve risk assessment accuracy and reduce costs, 65 percent anticipate better regulatory compliance, and 62 percent believe AI will enhance customer satisfaction and retention.
The report also highlights challenges surrounding AI adoption. Risks related to bias and reputational harm are significant concerns. Alarmingly, 21 percent of insurers—and 44 percent of smaller companies—have yet to implement formal policies governing AI use, which could create compliance vulnerabilities as regulations evolve.
Integration remains another hurdle: 71 percent of respondents report difficulty integrating AI solutions with existing legacy systems. To manage this, 65 percent are adopting phased rollouts to reduce risk and ensure smoother integration.
Fostering collaboration across departments is becoming a key strategy. Forty-one percent of companies are focusing on stronger cooperation between AI specialists and underwriting teams.
Additionally, nearly half (47 percent) are investing in upskilling their workforce and recruiting AI talent to meet the demands of an AI-driven industry.
“AI adoption is no longer optional, it is essential to future success,” added Ritesh Talapatra, Vice President and Sector Head for Capital Markets and Insurance, Wipro Limited.
“As firms that drive enterprise-wide AI adoption start to reap the flywheel effects, those slower to adapt will risk being left behind. Investing in a strong data, governance and technical foundation, and aligning AI initiatives to shared business objectives will be critical to success.
“For firms starting on the journey, prioritising quick wins and investing in building the foundation necessary for scale will be the key. Ultimately, the industry will need to recognise that AI is not just an innovation, it is the new foundation of success in insurance.”
The report clearly signals that AI is becoming indispensable for insurers aiming to enhance efficiency, compliance, and customer engagement—and those who delay adoption may fall behind.
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