The news: Nationwide Financial announced a $1.5 billion investment in technology through 2028, including $300 million for AI initiatives. The company aims to simplify business interactions and advance its data protection capabilities.
Nationwide plans to have 90% of employees “actively using everyday AI platforms by next year” to allocate their time most efficiently. Its live AI use cases include employee-facing customer service tools, telematics to risk-score drivers, and AI to summarize claims.
More on this: Insurers’ technology investments are growing, with CIOs allocating significant budgets to cybersecurity, genAI, core systems, and cloud migration. For example, Nationwide competitor Progressive spends more than $2 billion annually on information and communications technology. And AllState has adopted a multicloud infrastructure and is rebuilding core applications.
The backdrop: The market has been harsh to property and casualty insurers: Rising expenses, high claims payouts, and price-sensitive policyholders have constrained growth. Premium growth is expected to slow through 2026 amid more competition and inflation pressure. Insurers must be more efficient, reprice policies proactively and precisely, and reevaluate the customer experience.
The insurance industry also has other challenges that are deeper and longer-lasting: Carriers are pressed to improve their underwriting speed and precision, automate claims processing and servicing, and better integrate with partners. Those changes are business critical but largely superficial. Carriers also face deeper challenges, burdened by outdated technology that threatens long-term transformation across the front and middle office.
Our take: A massive technical overhaul is a strategic choice and a yearslong commitment sponsored by the C-suite and endorsed by the board of directors. AI is a tool rather than a strategy. And without intent, telematics, analytics, automation, and copilots are just words. Carriers must consider technology investments an integral part of global changes to business agility, operational efficiency, and risk management.