The institutional knowledge gap in insurance: Why AI isn’t the silver bullet

The insurance industry is facing an unprecedented wave of retirements, accompanied by a significant loss of institutional knowledge.

After all, the average age of a licensed insurance professional is in the mid-50s, and a significant portion of the most experienced underwriters, producers, and risk managers are about to retire within five to ten years.

This shift will inevitably lead to an institutional knowledge gap or the loss of experience, expertise, and trusted relationships built over decades.

“When that knowledge walks out the door, it can slow decision-making, disrupt continuity, and make it harder to serve customers and communities with the same level of care and consistency,” said Denise M. McCauley, chair, president, and CEO at WoodmenLife.

According to Frank P. Costa, principal and national growth leader at World Insurance Associates, the problem isn’t that younger professionals aren’t smart. They are. The problem is that insurance expertise is largely apprenticeship-based.

“You learn it by doing it alongside someone who’s done it thousands of times," Costa explained. "When that pipeline breaks down, clients get advice that’s textbook-correct but situationally wrong. That’s when coverage gaps happen. That’s when claims get denied. That’s when you lose a client you should have kept for life."

That said, insurers and their senior leaders have an obligation to preserve decades of hard-won expertise by supporting younger associates and positioning them for success.

AI’s role (and shortcomings) in the gap

There’s no denying that AI is a powerful tool that can help transfer and document knowledge. In addition, it’s used to improve efficiency and create capacity for better customer experiences.

It helps us simplify processes, gain insights, and operate more effectively, which ultimately eases the ability for new team members to learn.

Where AI falls short, however, is in human connection.

“It cannot replace trust, empathy, or understanding. For this reason, we must use AI thoughtfully and responsibly. The goal isn’t to replace people, but to free them up to focus on what matters most, which is building relationships and delivering a more human experience,” McCauley explained.

The second issue is that AI is trained on data, whereas institutional knowledge is the ability to recognize when the data is misleading or telling an incomplete story.

For example, a seasoned underwriter looks at a risk and says, “The numbers look fine, but I know this industry in this geography, and something doesn’t sit right.”

“AI doesn’t have that. It optimizes patterns in historical data. It can tell you what happened. However, it struggles to tell you what’s about to happen in a situation it hasn’t seen before,” Costa said.

Costa’s concern is that agencies lean on AI as a cost-cutting measure and convince themselves that they’ve solved the knowledge gap when they haven’t.

“When a complex claim hits, or a market hardens, or a client faces a loss scenario the AI never modeled, that’s when the gap opens and clients fall through it,” Costa added.

To address this challenge, insurance companies must invest in younger advisors. Here's how experts say senior leaders can influence the process:

Narrate your thinking out loud

When you’re reviewing a submission, a loss run, or a contract, don’t just make the call. Explain it.  “Walk a younger colleague through your reasoning. That’s how pattern recognition gets transmitted,” Costa said.

Engage younger producers in client conversations early

Let them observe how you handle a difficult renewal, how you manage a client who’s frustrated after a claim, and how you negotiate with a carrier. You can’t teach that in a classroom.

Create structured debrief habits

After every significant client interaction, sit down and talk through what happened, what you noticed, and what you would have done differently. “Make it a ritual, not an afterthought,” Costa explained.

Document your frameworks, not just your facts

The facts change. The frameworks endure. How do you evaluate a construction risk? How do you assess a new client’s risk culture? How do you prepare for a prospect meeting? Write that down. Record a video. Leave something behind that outlasts you.

Champion career pathways for younger professionals

Advocate internally for them to get stretch assignments, to join internal strategy meetings, to present at client stewardship reviews. Exposure accelerates development faster than anything else.

“The bottom line is if you’re a senior professional and you’re not actively mentoring someone right now, you are letting institutional knowledge die with you. That’s not a legacy worth leaving,” said Costa.

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Anna Baluch is a finance reporter and writer with more than a decade of experience. Contact her at [email protected]