Generative AI Set To Revolutionize Insurance Market, Forecast To Hit $14.4B by 2032

The global generative artificial intelligence (AI) in insurance market, valued at $761.4 million in 2022, is projected to surge to $14.4 billion by 2032, growing at a compound annual growth rate (CAGR) of 34.4 percent from 2023 to 2032, according to a report by Allied Market Research. This expansion highlights the increasing role of artificial intelligence in transforming insurance services, from personalized policy recommendations to more efficient risk assessment models.

Generative AI enables insurers to develop tailored solutions and precise pricing strategies through advanced machine learning models, improving the digital experience for policyholders while enhancing decision-making processes.

Key drivers of market growth include faster claims processing, improved customer service, and enhanced risk assessment capabilities. The adoption of explainable AI (XAI) is also expected to drive growth, offering transparency in AI-driven decisions and opening new opportunities for the insurance industry.

Component Breakdown. In 2022, the solution segment accounted for over two-thirds of the market share, with demand driven by the need to process large volumes of data and offer personalized services. This segment is expected to retain its dominance throughout the forecast period. However, the service segment is anticipated to grow at the highest CAGR of 36.5 percent during the same period, as insurers increasingly adopt generative AI to improve risk assessment and decision-making processes.

Technology Trends. Generative adversarial networks (GANs) held the largest share of the market in 2022, generating around one-third of the total revenue. Their ability to create realistic synthetic data for tasks such as fraud detection and underwriting has been instrumental in this growth. The diffusion networks segment is expected to achieve the highest growth rate at a CAGR of 38.6 percent, due to its capacity to model complex data over time, aiding in risk assessment and pricing strategies.

Applications in Insurance. The automated underwriting segment dominated the market in 2022, holding nearly one-third of the total revenue. Generative AI facilitates the automation of risk assessment, streamlining underwriting decisions and improving accuracy. Virtual assistants and customer support applications, driven by AI-powered solutions, are projected to see the highest growth, with a CAGR of 41.7 percent, as insurers increasingly rely on AI for real-time customer service.