The Growing Investment in Generative AI for Claims Handling

Artificial Intelligence (AI) has quickly evolved from a futuristic concept to a game-changer in industries worldwide, particularly in claims management. According to the IDC Worldwide AI and Generative AI Spending Guide, global spending on AI is set to exceed $632 billion by 2028, growing at a 29% CAGR. As businesses race to harness the power of AI, claims management is one of the most exciting and transformative areas. Here’s how these trends and projections affect the claims management landscape and the essentials you need to know to keep up.

AI Spending: What’s Driving the Growth in Claims Management?

AI is no longer just a tool for improving operational efficiencies—it’s revolutionizing how claims are processed, analyzed, and resolved. From AI-enabled applications to infrastructure and business services, organizations are investing heavily in AI to optimize claims management workflows, reduce fraud, and improve customer experiences.

Key Spending Highlights

Generative AI (GenAI) is gaining momentum, with a 59.2% CAGR (compound annual growth rate), and is projected to hit $202 billion by 2028. While GenAI has wide-ranging applications, its potential for claims processing is massive, transforming how claims data is analyzed, processed, and even generated in real time.

1. Software continues to dominate AI spending, representing over half of the global market. For claims management, this means a growing focus on AI-enabled applications, such as automated claims processing and fraud detection tools.
2. AI hardware, including servers and storage, is also seeing significant investments as businesses build out the infrastructure needed to support AI-driven claims solutions.

Generative AI’s Role in Claims Management

The AI surge is directly impacting claims management strategies. By automating repetitive tasks, improving accuracy in fraud detection, and speeding up claims processing, AI is enabling businesses to reduce operational costs and enhance customer satisfaction.

Generative AI: A New Era for Claims Processing

While AI has many branches, Generative AI is emerging as a key player in transforming claims management. GenAI’s ability to generate text, analyze complex data, and even predict outcomes provides a powerful advantage in optimizing claims workflows.

GenAI’s Role in Claims Management

• Automated Claims Processing: GenAI can process claims faster by analyzing complex data, automating decisions, and even generating required documentation. This reduces manual intervention and accelerates the entire process from reporting to resolution.
• Fraud Detection and Prevention: GenAI tools can analyze patterns across vast datasets to identify potentially fraudulent claims in real-time, improving the accuracy and speed of investigations.

Growth and Impact

With a 59.2% CAGR, GenAI is expected to account for 32% of AI spending by 2028. This remarkable growth signals its increasing importance, particularly for claims management processes where speed, accuracy, and fraud prevention are top priorities.

Leading Industries in AI-Driven Claims Management

While AI is transforming several industries, claims management within sectors like financial services, retail, and insurance is particularly ripe for AI adoption.

Financial Services: Leading the Way

The financial services industry, with banking at the forefront, will account for over 20% of AI spending. Claims management teams in financial services are leveraging AI to improve everything from claims triage to automated settlements, making processes more efficient and customer-focused.

Fast-Growing Sectors

Other industries are also seeing rapid AI adoption in claims management:

Retail: Retailers are using AI to streamline warranty claims, product return processes, and insurance claims.
Business and Personal Services: With a 32.8% CAGR, this sector is adopting AI to handle customer claims, manage service issues, and more.

As AI spending grows across these industries, the impact on claims management—through faster processing, enhanced fraud detection, and improved customer interactions—will continue to accelerate.

AI Infrastructure: The Backbone of Claims Management Innovation

To support the exponential growth of AI, businesses are ramping up investments in the infrastructure that enables AI systems to perform at scale. In claims management, the right AI infrastructure is essential for processing large volumes of claims data, running AI models, and ensuring operational efficiency.

Key Infrastructure Trends

AI Hardware is seeing a 37% year-over-year growth, as businesses invest in powerful servers and storage solutions to handle the data-intensive nature of claims management.
Accelerated Servers are critical in this shift, accounting for 58% of AI infrastructure spending. These servers are designed to handle the complex data models used in claims processing, fraud detection, and more. By 2028, accelerated servers will exceed 60% of total AI infrastructure spending, making them central to running AI-driven claims management systems.

Cloud vs. On-Premises Infrastructure

As the demand for scalable AI-driven solutions grows, cloud environments are becoming the standard for claims management. In fact, 65% of AI server spending in 2024 is directed toward cloud-based systems, underscoring the importance of cloud solutions in modern claims management. With hyperscalers and cloud service providers expanding their AI capabilities, claims departments can implement AI solutions without the overhead of maintaining on-premises infrastructure.

The Fast-Growing Use Cases in Claims Management

AI is transforming claims management in several high-growth areas, driving efficiency, reducing costs, and enhancing customer satisfaction. Here are the use cases to watch:

Leading Use Cases

• Augmented Claims Processing: Expected to grow at 35.8% CAGR, this use case is revolutionizing how claims are processed by automating data entry, streamlining decision-making, and reducing human error.
• Digital Fraud Prevention: AI’s ability to analyze vast amounts of data in real time is a game-changer for identifying and preventing fraud. This is especially crucial in claims management, where fraudulent claims can drive up costs and hurt profitability.

Emerging Use Cases

AI-Enhanced Customer Service: AI chatbots and virtual assistants can handle initial claims inquiries, direct customers to the right resources, and even help with claims follow-ups. This improves response times and customer satisfaction.
Self-Service Claims: AI-driven self-service options for customers to file, track, and resolve claims autonomously are reducing the need for human interaction and enabling faster resolutions.

These innovations are making claims management more efficient, reducing operational costs, and creating a more seamless experience for customers.

The AI revolution is transforming claims management across industries. With AI spending projected to exceed $632 billion by 2028, the opportunities to innovate and optimize claims processes are vast. From automated claims processing to fraud detection, AI is poised to redefine how claims are handled, enabling businesses to reduce costs, enhance customer satisfaction, and stay competitive.