The plan aims to harness the transformative potential of AI to boost economic growth, improve public services, and enhance the lives of British citizens and will impact the UK insurance industry in a number of ways, 

“Artificial intelligence is not a future technology; it’s here now, revolutionizing every aspect of our lives,” Sir Keir stated. “This government is committed to ensuring the UK leads the way in this technological revolution, not just follows.”

He continued: “In the coming years, there is barely an aspect of our society that will remain untouched by this force of change. But this government will not sit back passively and wait for change to come. It is our responsibility to harness it and make it work for working people. And it is our responsibility to make sure that Britain maintains its position as a world leader in AI, even as the competition increases.” 

Changes in the insurance industry could be seen in: 

Enhanced Risk Assessment and Underwriting: The integration of AI into insurance underwriting processes will likely accelerate under the AI Plan. By leveraging advanced machine learning algorithms, insurers can refine risk models, better predict customer behavior, and personalize policies. Government support for data-sharing frameworks and ethical AI will ensure these advancements comply with privacy and security regulations.

Claims Automation and Fraud Detection: AI-driven claims processes are already transforming the insurance industry by reducing settlement times and identifying fraudulent claims. With the UK’s emphasis on encouraging responsible AI use, insurers can expect improved access to tools that enhance claims automation while maintaining fairness and transparency in decision-making.

Improved Customer Experience: AI technologies like chatbots and predictive analytics will play a larger role in customer interactions. The government’s focus on encouraging AI innovation while ensuring ethical deployment will empower insurers to deliver seamless, personalized experiences that align with consumer protection standards.

Regulatory Adaptations: The AI Plan includes developing regulatory frameworks to address AI-related challenges. Insurers will need to navigate these evolving rules, particularly around the explainability of AI decisions, data protection, and bias mitigation. Clearer guidance could reduce compliance risks and increase trust in AI-powered solutions.

New Opportunities in Insurtech Collaboration: The AI Plan’s emphasis on partnerships and innovation hubs may drive collaborations between traditional insurers and InsurTech startups. This could lead to breakthroughs in areas such as dynamic pricing, real-time risk monitoring, and AI-powered health or cyber insurance solutions.

Ethical and Social Considerations: The focus on ethical AI will prompt insurers to address biases in algorithms and ensure inclusivity in policy offerings. Insurers must adopt transparent practices and develop AI systems that enhance fairness while avoiding discriminatory outcomes.

A Mixed Reaction

According to reports the new plan will impact businesses and organisations across the spectrum. The BBC reported that AI will be used by the public sector to enable its workers to spend less time doing admin and more time delivering services.

It stated:

• Several “AI Growth Zones” around the UK will be created, involving big building projects and new jobs.
• AI will be fed through cameras around the country to inspect roads and spot potholes that need fixing
• Teachers and small business owners were highlighted as two groups that could start using AI for things like faster planning and record-keeping.
• AI is already being used in UK hospitals for important tasks such as diagnosing cancer more quickly and it will continue to be used to support the NHS.

The plan has received mixed reactions. While some, like Science and Technology Secretary Peter Kyle, praised the move, saying: “AI has the potential to change all of our lives but for too long, we have been curious and often cautious bystanders to the change unfolding around us. With this plan, we become agents of that change.”   

But Shadow Science Secretary Alan Mak criticised the government’s economic policies, arguing that they undermine the potential for AI-driven growth. “Labour’s economic mismanagement and uninspiring plan will mean Britain is left behind,” he told the BBC, adding that Labour was “delivering analogue government in a digital age.”

Tim Flagg, COO of UKAI – a trade body representing British AI businesses, also said that the proposals take a “narrow view” of the sector’s contributors. “AI innovation spans industries, from small enterprises to non-tech sectors, all driving the new industrial revolution. It’s time the government recognised this broader definition and tapped into the full potential of AI across the UK.”

David Boosey, technology partner at MHA, a leading firm of accountants and advisers and the UK arm of Baker Tilly International,  outlined reasons why he didn’t think it could be successful.

He said: “Keir Starmer’s plan on AI won’t work; it’ll throw away money. This technology moves far too fast for long-drawn-out five-year government plans. Instead, they need to free up businesses to invest in AI, and the private sector will explode off the back of AI investment over the next few years. Tax is their number one tool to influence private sector behaviour. Although very unlikely to happen, they need to reduce the tax burden on companies so they have more spare profit to invest and compete. The use of super deductions for private AI investment could be useful.”

He concluded: “The government should support collaboration with the US so UK businesses can see the advantages of early adoption. They’re already pledging investment in AI infrastructure, but more support for the infrastructure the better. They could also provide grants for firms utilising AI tools, particularly start-ups focused on AI based tools.”

 However, Ryan Cox, head of AI at Synechron believes it will drive positive change. He said: “The potential of the UK government’s AI policy to drive innovation is clearly an exciting development. With the correct support, AI has the scope to supercharge the country’s economy, businesses, and people. Prioritising digital transformation using AI will help speed positive societal changes.

“In our own work with AI, both with employees and clients, we’ve seen AI significantly streamline operations, which is a harbinger of what is to come for other companies, government departments, and institutions. For instance, our HR team has saved more than 350 hours per month, our software engineers have seen up to 60% of productivity gains and investment banking clients have experienced a 50% reduction in research time using our AI tools. This is only a small example of the productivity gains that the UK government can expect to see in the future.”

David Hogan, Vice President Enterprise, EMEA at Nvidia also commented, saying: “The UK’s AI Opportunity Action Plan is a clear-sighted and ambitious policy initiative to establish the UK as a global AI leader. Delivering these commitments can boost economic prosperity, enhance public services and foster the growth of a thriving start-up ecosystem.”