Transforming Insurance in the UK: Exploring the Impact of AI, IoT, and Blockchain

The insurance industry stands at the forefront of a digital revolution as technological innovations and advancements are on the rise throughout the commercial world. As technology continues to evolve, Artificial Intelligence (AI), the Internet of Things, and Blockchain are emerging as powerful catalysts which are reshaping the traditional landscape of insurance. This article reviews the transformative influence of these technologies and explores their impact on the insurance sector.

Artificial Intelligence

Artificial Intelligence (AI) refers to the development of computer systems that can perform tasks typically requiring human intelligence and include learning, reasoning, problem solving, perception, and the comprehension of language. AI is predominantly known for its use in video games; however, it has become ubiquitous in a variety of industries and wide range of applications. The goal of AI is to create machines that can mimic or simulate human-like cognitive functions.

The past five years has seen significant growth in the use digitisation and automation within the insurance industry, a trend that accelerated in 2020. This momentum has, arguably, produced customers who have become accustomed to the convenience, speed and efficiency offered by the digital realm and increased the demand for constant, round-the-clock access to insurance providers, anytime, anywhere.

A recent survey by Deloitte revealed that a staggering 95% of insurers are actively prioritising the acceleration of their digital transformation initiatives. The primary focus of this centres around digitising claims management, identified by Deloitte as the emerging battleground for transformation, differentiation, and automation. Given that traditional straight-through processing rates remain at below 10%, there is a clear incentive for insurers to leverage technologies that can enhance data accuracy and streamline “clean claims”.

Key objectives for insurers in the digital transformation journey include:

  1. Accelerated Claims Processing
  2. Increasing Throughput and Accuracy
  3. Providing an Enhanced Customer Experience
  4. Meeting Industry Compliance and Regulatory Agency Requirements
  5. Safeguarding Data and Ensuring Business Continuity
  6. Supporting a Decentralised Workforce
  7. Improving Claims Volume Forecasting

By addressing these objectives, insurers aim to not only meet the expectations of digitally savvy customers, but to optimise operational efficiency, compliance, and strengthen business resilience.

The Internet of Things

The Internet of Things (IoT) refers to the interconnected network of physical objects, or “things”, embedded with sensors, software, and other technologies to facilitate data exchange with other devices and systems over the internet. These devices range from everyday household items to advanced industrial tools. Experts anticipate that by 2025, there will be 22 billion connected devices, underscoring the expansive growth of this technology. Oracle, a database management company, is actively engaged with a network of device partners in this evolving landscape.

The proliferation of IoT devices is poised to bring both positive and negative transformation in the insurance sector. The continuous monitoring capabilities offered by IoT have the potential render conventional insurance models obsolete over time, as a substantial portion of physical risks can be identified and mitigated before they even manifest. Simultaneously, new risks, such as cyber threats, are surfacing, giving rise to the possibility of cyber risk insurance becoming a focal point in the industry.

Given that insurance is fundamentally data-centric, innovations like IoT which enhance data availability, can boost efficiency for insurance companies. This article examines 6 key areas where IoT is expected to have a significant impact on the insurance sector:

  1. Better Understanding of Customer Behaviour: IoT enables a deeper understanding of customer behaviour through continuous monitoring.
  2. Efficient Claims Processing: Streamlined claims processing through real-time data from IoT devices enhances efficiency in the insurance workflow.
  3. Customised Insurance Practices: The availability of detailed data from IoT allows insurers to tailor insurance practices to individual needs and behaviours.
  4. Potential Loss of Business: Traditional insurance models may face challenges as preventive measures through IoT reduce the occurrence of insurable events.
  5. New Insurance Areas: Emerging risks, particularly in cybersecurity, create opportunities for new insurance products and coverage areas.
  6. Increased Risk of Data Privacy and Security Issues: The extensive use of IoT raises concerns about data privacy and security, necessitating robust measures to safeguard sensitive information.

Understanding the potential of this technology is crucial for insurance executives navigating the evolving landscape shaped by IoT, allowing them to harness its benefits whilst proactively mitigating challenges presented by data privacy and security regulation.


Blockchain is a decentralised and immutable ledger that streamlines transaction recording and asset tracking within a business network. It enables the monitoring and exchange of assets, whether tangible (such as real estate, vehicles, cash, or land), or intangible (including intellectual property, patents, copyrights, and branding). Virtually anything of value can be logged and traded on a blockchain network, offering a reduction in risk and cost for all participants.

In the insurance sector, blockchain solutions play a crucial role in enhancing the efficiency and transparency of various processes, including underwriting, reinsurance, and claims management. These solutions contribute to fraud prevention, foster customer trust, and open opportunities for accessing new markets. The financial services industry is a major contributor to the global blockchain technology market, accounting for over 38% of revenue in 2021.

The adoption of blockchain and distributed ledge technologies (DLT) (technology infrastructure and protocols that allow simultaneous access, validation, and record updating across a networked database, Investopedia) in the insurance domain is on the rise, with 58% of insurance companies planning to increase their spending on these technologies, as highlighted by Deloitte. Additionally, 65% of insurance executives recognise the need for their organisation to adopt DLT to stay competitive, according to recent research.

Several factors are driving the increasing popularity of blockchain in the insurance sector:

  1. Rise in Insurance Fraud: The escalation in both volume and costs of insurance fraud has prompted the adoption of blockchain as a tool to counter fraudulent activities.
  2. Need for Operational Efficiency and Accuracy: Insurance operations benefit from improved efficiency, accuracy, and traceability through the implementation of blockchain solutions.
  3. Demand for Convenient and Secure Payments: The high demand for swift, secure, and convenient insurance-related payments has fuelled the adoption of blockchain technology.
  4. Legal Pressure for Inclusive Insurance Services: Regulatory pressure to expand access to affordable insurance services in underserved markets has become a driving force for blockchain in adoption in the insurance industry.

These key factors underscore the transformative potential of blockchain in the insurance landscape, as companies seek to leverage the technology to address challenges, enhance operational processes, and ultimately remain competitive in a dynamic market environment.

In conclusion, cutting-edge technologies like AI, IOT, and Blockchain are steering the insurance industry into an era of innovation and efficiency. As the sector witnesses a surge in digital transformation initiatives, these technologies are proving to be pivotal in addressing longstanding challenges and unlocking unprecedented opportunities.

In this dynamic landscape, where the intersection of technology and insurance forms the cornerstone of change, the insurance sector is not just evolving- it is pioneering a future where resilience, adaptability, and customer empowerment will drive success. The transformative impact of AI, IoT, and Blockchain on the UK insurance industry is not merely a trend, but a fundamental shift that promises to redefine the industry’s role in safeguarding individuals and businesses alike.

About the author

James recently joined us in 2024 as a Learning Design Specialist. A former schoolteacher, James brings a wealth of experience. With his background as an educationalist, he brings great insight into learning processes and looks forward to using his experience in the classroom to enhance Development Zone content, boost learning engagement, and enrich the educational experience of users.

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