The insurance industry is on the cusp of a significant transformation with the advent of agentic AI, but independent agents and brokers face substantial hurdles in leveraging this technology. According to Garrett Droege, senior vice president and director of innovation and digital risk at IMA Financial Group, a major insurance and financial services firm with over $8 billion in annual premiums, the primary obstacle is the lack of modern, accessible data systems.
The Challenge of Legacy Systems
Many of the top 50 property and casualty insurers still rely on mainframe computers and actuarial tables built in the 1950s and ’60s. “You can’t take that out of that computer and plug it into a modern system,” Droege explained. This forces companies to reverse-engineer their core data systems to streamline workflows with AI, a process that’s both complex and costly.
Assessing Agentic AI Quality
Droege noted that evaluating the quality of agentic AI services is challenging without updating core systems. “You have a hard time even testing whether this will work without updating your core system or components that you can modernize,” he said. The market is flooded with startups building insurance-specific functions on top of public AI models like ChatGPT or Gemini. However, these solutions are often mere “wrappers” on existing technology, lacking true innovation and sustainability.
Data Requirements
Data Requirements for Agentic AI
The insurance industry lacks the necessary data infrastructure to support agentic AI fully. Simple tasks like certificates of insurance, updating insurance records for new vehicles or employees, and modifying coverage require access to agency management system (AMS) platforms. “None of those functions that agentic AI can do for insurance are available without access to the AMS platform,” Droege emphasized.
Impact on Independent Agents
Smaller and mid-sized independent agents are particularly vulnerable as they struggle to compete with larger firms that can invest in better technology and user experiences. “You’re going to have a more knowledgeable platform that’s more helpful,” Droege said. “Clients will ultimately gravitate towards that.” The inability to effectively use agentic AI could lead to a “mass exodus of clients” from agents who fail to modernize.
Insurtech Solutions and Limitations
Some AI insurtech companies are finding workarounds by embedding themselves in email systems like Outlook or Google Workspace. However, these solutions are limited as they still require manual data entry into AMS platforms. “Insurtech has largely been a Band-Aid for the biggest problem in the industry, which is core data systems,” Droege observed. The long-term viability of these temporary fixes remains uncertain.
