In insurance, contracts aren’t just paperwork - they are the core product. They’re a business’s most valuable asset. They are the foundation of the revenue. Yet, as regulations tighten, compliance can consume up to 5.2% of insurance premiums collected. Staying ahead takes more than diligence. It demands a smarter, faster way to manage contracts. It demands a smarter, faster way to manage contracts. Artificial intelligence is becoming essential to stay competitive.
Manual contract management is slow, costly, and prone to error. Today, AI-powered contract lifecycle management (CLM) automates routine tasks or compliance checks across complex multi-jurisdictional agreements, reduces mistakes, and gives insurers faster access to critical data. With ongoing monitoring and anomaly detection, AI spots risks long before they become problems, safeguarding an organisation’s reputation and bottom line. When insurers work with a CLM provider that embeds AI into workflows, they can improve efficiency while retaining control of their data.
The Hidden Costs of Unmanaged Contracts in Insurance
Recent Workday research has uncovered a serious issue for insurers: unmanaged contracts. According to the data, more than 70% of leaders admit that poor contract management has led to missed revenue opportunities, unexpected costs, and increased risk exposure. In insurance, where margins are tight and competition fierce, these hidden losses can eat into profits and undermine growth.
The problem is scale. Most insurers manage thousands of contracts across policies, partnerships, and providers. Without visibility, it’s easy for obligations, milestones, and renewal dates to slip through the cracks. Our research found that organisations lose millions each year due to missed terms and overlooked value. The lesson is clear: the faster you can surface these insights, the faster you can act.
Human Error? Not on AI’s Watch
Confusion over contract ownership is widespread. In fact, 76% of employees don’t know who owns their contracts. This muddle leads to missed clauses, wasted hours, and real business risks.
There’s a smarter way. AI-driven platforms pull out any data you need, fast. They deliver sharp insights, help teams make better decisions, and free up hours to focus on high-impact work. Instead of drowning in low-priority tasks, teams can zero in on high-risk contracts, and truly make a difference.
Centralising contract data with AI doesn’t just create order. It provides control, visibility, and stronger protection against risk. In insurance, contracts are complex and specialised. Advanced models trained on contract language enable greater accuracy at every stage. Importantly, implementation is not disruptive: these AI solutions integrate seamlessly into existing systems like Guidewire or Duck Creek, the leading Policy Administration Systems, ensuring rapid adoption with minimal friction. The impact is significant: AI-powered CLM can reduce contract execution times by up to 60%, improving responsiveness across the business.
Security is key
Today's platforms let organisations set custom user roles and lock down data access with precision. An AI security layer actively screens every request, blocking malicious intent and ensuring users only see what they’re authorised to. Sensitive data like PII, PHI, and PCI is rigorously anonymised and aggregated, keeping it safe at every step. And when external AI services are involved, strict guardrails ensure only trusted partners and their teams ever touch your data. With these advanced protections, privacy and compliance aren’t just promises - they’re built in.
Turning Contracts into a Source of Growth
Contract intelligence isn’t just about compliance and risk, it’s about growth. Intelligent CLM platforms can also uncover new revenue streams and help insurers negotiate better terms during M&A activity and renewals. By automating the analysis of large, complex contract portfolios, insurers can identify underutilised agreements, spot revenue leakage, and seize upsell opportunities.
Contracts are packed with critical business information that's often buried across hundreds of pages; however, with the rise of AI agents for instance, we can finally turn these contracts into living, intelligent assets by using the agents to query existing contractual data to retrieve useful information or to directly update details, such as a tax rate.
This is especially powerful during mergers and acquisitions, a common play in insurance. Investing in intelligent CLM can accelerate M&A due diligence by surfacing key terms, obligations, and risks across hundreds or thousands of contracts. For insurers, this means faster, smoother integrations and a clear line of sight to synergy realisation.
Managing Risk Amid Growing Regulation
Sensitive contract data needs more than a filing cabinet. AI-driven CLM platforms make information accessible, trackable, and secure. This can be crucial for meeting compliance and fending off cyber threats like phishing and hacking. They highlight high-risk clauses and obligations, keeping you compliant and out of trouble.
The regulatory landscape for financial services is only getting more and more complex. This is why many financial institutions, and insurers in particular, are turning to contract intelligence to manage third-party risk, track regulatory requirements, and monitor obligations in real time. With AI, insurers can quickly flag non-standard terms, track regulatory changes, and automate compliance reporting. The result? Fewer manual checks, faster audits, and peace of mind.
Slow contract processes are innovation killers. Over 41% of employees say contracts take too long, stalling creativity and product launches. This leads to teams skipping steps to avoid delays, in the process creating even bigger risks. AI breaks this cycle, streamlining reviews and approvals so teams can work smarter, not harder.
The Road Ahead for the future of insurance: Responsible AI in Contracts
Contracts are the foundation of financial services. Outdated, manual processes just don’t cut it anymore. AI-powered CLM streamlines workflows, reduces errors, and delivers the insights you need to navigate ever-changing regulations. It transforms contract management from a burden into a strategic advantage; driving efficiency, compliance, and growth.
But success depends on responsible implementation. Research has shown that 60% of organisations that don’t require their vendors to follow responsible AI practices in their contracts are at heightened financial and reputational risk through 2025. The stakes are too high to overlook.
The future of insurance hinges on intelligent contract management. AI-powered CLM is no longer optional; it is a strategic asset that drives efficiency, compliance, and revenue assurance. By enabling intelligent systems to optimize the contracts underpinning risk, insurers can surface unseen value and act faster. To realize this potential, Responsible AI implementation is essential to safeguard against financial and reputational risk, ensuring that every clause counts and none go unnoticed.
