Chief executives of insurance companies across the globe are set to ramp up investments in artificial intelligence (AI), with many expecting faster returns on the technology, a new report by global consultancy firm KPMG has revealed.
According to the 2025 Insurance CEO Outlook, about 73 per cent of insurance CEOs have identified AI adoption as their top investment priority. In addition, 67 per cent said they plan to channel between 10 and 20 per cent of their budgets into AI-driven initiatives.
The report shows a sharp shift in expectations around returns on AI spending. While only 21 per cent of CEOs in 2024 anticipated seeing returns within one to three years, that figure has now surged to 67 per cent in 2025.
KPMG noted that AI has evolved from a trial phase to a core driver of value for many insurers.
“With the exception of a few mutual firms, most companies are now seeking rapid payback from AI investments in order to meet shareholders’ short-term expectations,” the report stated.
Insurance firms are already deploying AI across key operational areas, particularly in claims management. AI tools are being used to analyse and validate claims, speed up approval processes and enable automated payouts. The technology is also being integrated into underwriting through advanced algorithms that assess risk more efficiently.
Beyond cost reduction, insurers see AI as critical to boosting overall operational efficiency, especially in customer-facing services and back-office processes.
“Some simple policies can now be completed online in a matter of minutes, while AI systems can automatically approve many claims, such as car accident cases where images are analysed by algorithms for severity and authenticity,” KPMG noted.
Despite the enthusiasm, the report highlighted growing concerns among industry leaders about the risks associated with AI deployment, particularly in the absence of clear regulatory frameworks.
Issues around ethics, data readiness, cybersecurity and compliance were identified as key challenges that could erode public trust if not properly managed.
“A large majority of CEOs, about 77 per cent, believe that the slow pace of regulatory progress could hinder their organisation’s success. At the same time, the lack of clear AI regulation ranks as the second biggest obstacle to effective AI implementation,” the report added.
Analysts say while AI presents huge opportunities for innovation and efficiency in the insurance sector, balancing rapid adoption with strong governance and regulation will be crucial to sustaining long-term gains.
