But it’s not just younger customers. According to one survey, some 90 percent of customers prefer to interact with insurers using digital channels.

There are advantages to AI-based digital insurance for both insurers and customers, especially in areas like health and life, where traditional companies still dominate. It enables insurance firms to collect higher quality data and offer their customers more relevant products, as well as diversifying offers such as microinsurance, tailor-made policies based on lifestyle, and more. For customers, such insurance products can lower costs with customers paying only for services they actually need, based on their own choices.

Transformation in 2023 is critical but not without challenges. According to a 2020 survey, over 50 percent of top-level insurance industry executives say they are prioritizing  growth in digitization and automation, but issues such as legacy systems, employee culture, and lack of high-quality data  are proving to be obstacles. Recruiting the right talent is also top of mind in the insurance industry, with 25 percent of insurance tech roles currently vacant.

The opportunity to offer AI-based digital products has never been greater. For example, the widespread use of health wearables—think trackers, watches and even shoes—provides the opportunity for companies to develop life and health insurance products. Personalized policies can ensure lower prices for healthy customers, while incentivizing people to adapt their lifestyles in order to qualify for lower rates.

There is a wide variety of technical challenges which insurers will need to overcome to take advantage of growing data sets. This ranges from how they collect and access new data, to how they ingest and analyze it, to how they are able to translate new insights into changed workflows and customer interactions. Companies are future-proofing themselves by ensuring that customer data remains secure remains secure and without putting customer trust at risk.

To get these offerings right, insurers are reshaping how they test and enhance their service offerings to keep pace with customer expectations. Some service offerings will be radically transformed as insurers continually test changes with customers, a new concept for this industry. For example, insurers are considering under what circumstances will customers be willing to share more personal data? What types of new services will customers find valuable enough to change the way they engage with their insurers? This continuous and rigorous customer testing is de rigueur in the corporate world, and insurance companies are following suit.

Insurers play an essential role in society to help mitigate risk and manage  unexpected life events. New technologies can make them even more effective in that role. But time is of the essence to secure essential tech capabilities and transform into digital industry contenders.