Every other financial industry has had its reckoning. Insurance keeps postponing its own - and the people at the top know exactly why
Why is Insurance still so far behind AI adoption?
Every other financial industry has had its reckoning. Insurance keeps postponing its own - and the people at the top know exactly why.
Let me ask you something. When last did you hear someone say "the insurance industry is really innovating right now"? Exactly. You haven't. And honestly - that's not an accident.
Banking got shaken up. Payments got reimagined. Even the notoriously slow legal sector has found its way to the cloud. But insurance? Insurance is still largely doing what it's always done, the way it's always done it. And there are 3 very specific reasons for that.
The old hands aren't stupid. They're just not incentivized to care.
The first is leadership. The people running most of the big insurers and brokerages built their careers on relationships, actuarial tables, and systems that - look, they still work. Barely, but they work. When you're sitting at the top of an organization that's still profitable, the urgency to disrupt yourself feels completely optional. It isn't - but it feels that way. Change is hard, I know because I've tried to implement it to different degrees of success.
The second reason is the one that genuinely makes me laugh, it's almost poetic in how ironic it is. Insurance is an industry built entirely on managing risk. Its whole reason for existing is to look at uncertainty and put a number on it. And yet, when it comes to adopting new technology, new models, new ways of reaching customers? Suddenly it's "unproven." Suddenly it needs 30 years of data before anyone will touch it. Let me remind you that once upon a time insurance itself was unproven.
An industry that exists to price risk refuses to price the risk of standing still lol.
The Insurtech players - your Lemonades, your Roots - haven't killed the old guys. But they've done something just as important: they've shown customers that a better experience is possible. And customers remembered. The old guys noticed too. Most just filed it under "watch and wait."
It's not a tech problem. It never was.
The third reason - and this one is a bit of a get-out-of-jail-free card that the industry leans on heavily - is regulation. Insurance is one of the most heavily regulated industries on the planet, and genuinely, that does slow things down. New products, new models, new ways of doing business all have to run the gauntlet of regulatory approval before they can go anywhere near a customer. And I've seen this crawl here in SA.
But here's my take on it - and I think this is actually the most interesting part of the whole conversation. The smart money isn't waiting for regulators to catch up. It's finding the areas that aren't yet under the microscope and building there first. Test it. Prove the value. Let the results do the talking. Because when regulation does eventually catch up - and it always does - those businesses aren't scrambling to adapt. They're already primed. They've already done the hard work, gotten the culture shift right, and they just get to flip the switch.
That's not regulatory avoidance. That's playing it smart.
Look - the tools exist. The customer demand is real. The talent is out there. What's missing isn't capability. It's the willingness of the people in the big chairs to be bold in the 5th industrial revolution.
That's not a tech problem. That's a succession problem. And until the industry is honest about that, we're going to keep having this same conversation.
The good news? A new wave of builders isn't waiting around for permission. And that's where it gets interesting. 👀