Artificial Intelligence in Insurance: Industry Transformation, Customer Benefits, and Emerging Risks

Abstract

Artificial intelligence (AI), and generative AI in particular, is being adopted across the insurance industry at the same time that customers are migrating to digital channels and demanding greater personalization. The purpose of this review is to examine how AI is reshaping insurance, why it can benefit customers, and how it can simultaneously leave insurers worse off. Methodologically, the study is a structured narrative review rather than an empirical study: peer-reviewed research and authoritative industry, regulatory, and market sources published primarily between 2022 and 2026 were purposively selected for relevance, recency, and authority, and were synthesized around the insurance value chain and the opportunity- risk duality of AI. The review finds that adoption of AI is now near-universal among insurers, yet only a small minority have scaled it beyond pilots. AI delivers tangible customer benefits- faster service, broader access, and personalized pricing and products aligned with documented demand for digital, tailored experiences and the emerging shift to agentic AI is beginning to reshape distribution, augmenting human agents while threatening to disintermediate them. The same capabilities, however, generate countervailing risks: generative tools both strengthen and undermine fraud defenses by enabling deepfake and synthetic claims; they intensify data-privacy tensions; and opaque models raise concerns about bias, fairness, and trust that are now being codified in regulation. The study concludes that AI’s net effect on insurers is conditional rather than predetermined, depending on governance, transparency, and the management of an inherent tension between personalization and privacy. The review contributes an integrative synthesis that links AI’s benefits to their countervailing risks and identifies directions for future research.