In this column, authors provide commentary on economic and financial topics.

For more than a decade, the industry has been telling itself the same story: disruption is imminent. Artificial intelligence will soon make underwriting obsolete. An InsurTech will redefine the market.

None of this has materialized. And for reasons that are rarely articulated openly: insurance is not a digital lifestyle product—it is a core component of the financial system, built on highly resilient mechanics.

Interest rates outweigh AI. Claims inflation outweighs chatbots. A single mispriced industrial risk can wipe out any efficiency gains achieved through process automation.

Technology: More Risk Than Innovation for Many

In presentations, technology is celebrated as a key growth driver. Behind closed doors, the narrative is far more cautious:

• «We can no longer find anyone who fully understands our core system.»
• «We are increasingly concerned about cyber risk.»
• «We are unsure whether our data quality is sufficient.»
• «The next major IT program could result in another multi-million write-off.»

«The industry is investing billions in technology, yet productivity gains remain modest.»

This is the industry’s reality. And it explains why, in many cases, IT functions primarily as a stabilization mechanism, rather than a driver of new business models.

Productivity Gains? Limited at Best

The sector continues to allocate billions to technology, yet productivity improvements remain subdued. Why? Because in insurance, a single mispriced risk can instantly offset gains from more efficient back-office processes.

Moreover, many technologies trigger a paradoxical arms race: AI enhances claims assessment while simultaneously enabling more sophisticated fraud schemes. The net benefit is often negligible.

This dynamic echoes the observation by Robert Solow: «You can see the computer everywhere but in the productivity statistics.»

Opting Out of Technology Is Not an Option

Technology is not delivering a sweeping revolution—but it does provide what is essential to remain competitive:

• Customer experiences that are no longer anchored in the 1990s
• Data-driven decision-making rather than intuition
• New products addressing emerging risks
• Incremental efficiency gains that sustain competitiveness
• Work environments capable of attracting and retaining talent

Technology is not a panacea—but it is indispensable. Without it, the industry stagnates.

AI: Value Driver or Strategic Illusion?

Many firms approach AI with near-religious zeal—«AI-first,» «AI everywhere.» The rhetoric is compelling, but often lacks substance.

The relevant question is straightforward: Where does AI create measurable value?

Where does it reduce claims costs? Where does it improve conversion rates?

«The real threat does not come from InsurTechs, but from platforms, OEMs, and Big Tech.»

If a project cannot answer these questions, it is not a strategic initiative—it is a cost center with strong marketing.

Legacy Systems: When Do We Stop Dressing Up Dinosaurs?

For decades, insurers have «wrapped» legacy core systems. This approach is pragmatic—but ultimately finite.

What is missing is conviction:

• The willingness to pursue modular replacements
• The readiness to execute structural resets
• The commitment to architectures designed for change

As long as 70% of IT budgets are allocated to maintaining legacy systems, meaningful transformation will remain out of reach. Addressing this requires a long-term horizon—at least a decade.

InsurTech: Threat Averted? Not Quite

The anticipated startup-driven disruption has not materialized. But complacency would be a strategic error.

The real competitive threat comes from players with scale advantages in customer access, data, and capital—far beyond those of traditional insurers: platforms, OEMs, and Big Tech.

If these players fully commit, competitive pressure will intensify—particularly if they succeed in reframing insurance as a subscription-based protection service.

Regulation: The Underestimated Force

For many insurers, the technology agenda is shaped less by the CIO and more by regulatory requirements.

Frameworks such as IFRS and DORA, alongside cloud dependencies and geopolitical tensions, are forcing insurers to invest in redundancy and technological sovereignty.

These investments are costly—but unavoidable.

A Call for Strategic Clarity

Between hype and inertia lies a third path: a clear-eyed understanding of what technology can—and cannot—deliver.

The relevant question is not «disruption.» The question is whether technology delivers two outcomes that are visible in the P&L:

1. Lower claims costs
2. Lower operating costs

«Without compromising risk quality. Everything else is cosmetic.»

This translates into a focus on three core KPIs, monitored monthly at CEO/CFO level:

• Straight-through processing rate in claims (degree of automation)
• Quote-to-bind ratio in core distribution channels
• Time-to-Yes (or No) in standard underwriting

This requires discipline. If a use case fails to demonstrate measurable impact within twelve weeks—based on hard data, not anecdotal feedback—it should be terminated, regardless of its narrative appeal.

At the same time, firms must demonstrate execution discipline and organizational commitment to scaling successful initiatives.

Those who address this question rigorously will lead over the next decade. Those who continue to substitute strategy with rhetoric will ultimately be corrected by the market.

Dimitri Wulich is Managing Director, Head of Insurance ALPS (CH & AT) at Zühlke Group. 

Lukas Stricker is Head Further Education at the  ZHAW; his areas of work and research focus are sustainable insurance, transformation in the insurance sector, and industrial insurance.

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