AI isn’t a feature—it’s a foundation: rethinking core insurance systems

Many insurers are exploring how to bring AI into their operations—but AI isn’t just another feature to plug into the stack.

It’s a catalyst for reimagining how insurance work gets done.

When treated as a foundational capability—not something bolted-on—AI can reshape processes, sharpen decision-making, and unlock new levels of efficiency and performance across the organization.

The Old Core trap

For decades, insurers have built operations on a patchwork of Old Core systems, layered through acquisitions and propped up by manual workarounds. These systems were never designed for real-time data, dynamic decision-making, or modern automation.

Today, teams face rising submission volumes, tighter margins, and growing pressure to stand out—but their tools haven’t kept up. Most legacy platforms still rely on static guidelines, PDFs, and spreadsheets. Manual prioritization and siloed decision-making still dominate. Valuable effort goes to low-fit risks that never bind, while high-value deals get delayed or lost.

That’s why simply adding new tools on top of outdated infrastructure isn’t working. The systems themselves are part of the problem, and attempts to modernize them without addressing that only make things worse.

The false promise of "bolted-on" AI

To fix these problems, many insurers try to layer AI on top of existing tech. It sounds promising, but in practice, it’s like putting a jet engine on a model airplane.

These bolt-on solutions lack context and are disconnected from core decision-making. A a result, they end up adding to complexity rather than reducing it.

For example, a bolted-on AI solution might flag a strong submission. Yet, underwriters still have to dig through disparate tools and manually gather data before they can stitch together a quote.  

Reimagining the core with AI at the center

Real progress means treating AI as foundational to how insurance work gets done.

That starts with systems in which AI orchestrates every step. Submissions are triaged in real time against appetite. Risk is analyzed dynamically. Quotes are built in minutes, not days, with full transparency into how decisions are made.

This doesn’t just make underwriters faster—it makes them smarter. It removes low-value work and equips them with the tools to make high-impact decisions aligned with strategy.

The cost of inaction

The gap between insurers that treat AI as foundational and those that don’t is widening. Those who wait are stuck with inefficiencies, missed opportunities, and shrinking competitive ground.

According to the 2025 Federato State of Underwriting Report, over half of insurers still track win rates manually. More than 70% of underwriters lack real-time portfolio visibility. And nearly one in four submissions falls outside of stated risk appetite, leading to wasted effort and slower growth.

Building for what comes next

Insurance is entering a phase where agility, accuracy, and alignment matter more than ever. Rising reinsurance costs, volatile risk, and mounting pressure to grow demand a new approach.

That starts with rethinking core insurance systems—not just to move faster, but to move smarter. The insurers that build on AI now will be the ones shaping the future.