Historically, these barriers have been crucial for keeping new entrants out and for ensuring stability and profitability for established players. However, these barriers are now being significantly challenged by the introduction of generative AI and other technological advances.
First, new technology and increased access to data will change the very content of customer value propositions. Offering standardized products will no longer be sufficient. Customers expect personalized solutions based on real-time information, for example through sensor technology and external data sources. Insurance companies have traditionally controlled their own data, but now risk being sidelined if they fail to access or effectively utilize data from new sources. For instance, sensor data and user data from vehicles may increasingly be controlled by car manufacturers or technology companies that supply vehicle software. This makes it more difficult for insurers to develop competitive products, particularly in areas such as autonomous vehicles, where they may not have access to the underlying platform or infrastructure.
If car manufacturers or technology companies control the data, the platform, and the customer interface, insurance companies may no longer be the natural providers of insurance for these vehicles. Instead, car manufacturers themselves, or large technology firms, may offer insurance as an integrated part of their service offering. This challenges the very foundation of many insurance companies and forces them to rethink both partnerships and business models.
As a result, the industry may face an entirely new competitive landscape. Competitors may no longer be traditional insurance companies, but rather technology giants such as OpenAI, Microsoft, or Google, which own both the distribution channels (OpenAI with ChatGPT, Microsoft with Copilot, Google with Gemini) and the data required to build advanced personalization components into insurance products. These actors already have a significant advantage in developing AI-driven platforms, user interfaces, and customer data capabilities, enabling them to deliver more seamless, relevant, and dynamic insurance solutions than established insurers are able to offer today.
In addition, regulatory requirements that previously served as entry barriers may now be easier for technology companies to manage due to their strong capabilities in automation and compliance management. This further weakens traditional insurers’ competitive advantages and makes it harder to protect market positions through regulatory or operational barriers alone.
To meet this development, insurance companies must consider how they can collaborate with technology companies, open up for data sharing, and develop new value propositions that fully leverage the opportunities created by AI and digitalization. At the same time, they must invest in their own technological competence and actively work with innovation to remain relevant in an industry where the competitive landscape is constantly evolving and customer expectations continue to rise alongside technological progress.
What should insurance companies do in response to AI?
Artificial intelligence has the potential to change fundamental principles in the insurance industry. To meet this development, insurance companies must take a proactive approach and transform across multiple areas in order to remain relevant and competitive.
1. Develop adaptability and a willingness to change
The development of AI is still characterised by uncertainty and rapid change. As a result, it is more important than ever for insurance companies to develop an adaptive mindset—the ability to learn, adjust course, and transform quickly. This involves building change capability as a core organisational muscle, ensuring readiness to handle both known and unknown challenges. A culture of continuous learning, experimentation, and openness to new ways of working will be critical.
2. Take a holistic approach to AI across the entire value chain
Experimenting with AI in isolated projects or individual processes is not sufficient. Insurance companies should explore how AI can be integrated across the entire value chain—from product development and pricing to distribution, underwriting, customer interaction, and claims handling. A holistic approach enables better use of data, increased personalisation, automation, and improved decision‑making. This requires close collaboration between technology, business development, and organisational change.
3. Explore and establish new partnerships
To offer relevant and future‑ready insurance solutions, companies must form partnerships in new areas. This includes collaboration with technology companies, data providers, distributors, and platform players, as well as within underwriting and claims management. By opening up to data sharing and joint service development, insurance companies can participate in ecosystems where AI is fully leveraged. Such partnerships may, for example, provide access to sensor data from vehicles or homes, or enable insurance to be integrated as part of other service offerings. This is essential for developing differentiated and personalised value propositions that meet customer expectations in a digital‑first world.
Those who take action now will be best positioned to create the insurance solutions of the future and secure competitiveness in a market that continues to evolve.
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