# How to estimate insurance automation return on investment (ROI)

Original article: https://decla.com/guides/insurance-ai-roi

Text version: https://decla.com/guides/insurance-ai-roi/llms.txt

## Section outline

- [Fix the task and measurement basis](https://decla.com/guides/insurance-ai-roi#basis)
- [Build the estimate in four steps](https://decla.com/guides/insurance-ai-roi#method)
- [Worked example: capacity improves, cash does not](https://decla.com/guides/insurance-ai-roi#example)
- [Show the zero-realization case](https://decla.com/guides/insurance-ai-roi#cash)
- [Test the assumption that could change the decision](https://decla.com/guides/insurance-ai-roi#sensitivity)
- [Source and calculation scope](https://decla.com/guides/insurance-ai-roi#source)
- [Frequently asked questions](https://decla.com/guides/insurance-ai-roi#faq)

Estimate insurance automation ROI in two views: the staff capacity a task could release and the cash benefit the agency could actually realize. Include preparation, review, rework, setup and fees over the same window. A dollar value assigned to time is not cash saved.

## Fix the task and measurement basis

For an agency operations owner and finance reviewer, start with one endpoint: for example, a reviewed renewal-information draft ready for internal handoff. Compare the same task scope, source completeness and accepted endpoint in the manual baseline and proposed approach. Count each task once; retries and corrections belong to that task’s effort.

Use active person-minutes, summing the preparer’s and reviewer’s effort while removing overlapping intervals for the same person. Two people working together consume two people’s time. Record external waiting separately. Keep incomplete observations and unknown times visible rather than treating them as zero.

Choose a fully loaded hourly cost and state its components, such as pay, employer taxes and benefits. The illustration uses one assumed rate for all roles; use role-specific rates when they differ.

## Build the estimate in four steps

1. Measure both paths (Owner: Operations owner)

   Record baseline preparation, review and rework. For the proposed approach, include human input preparation, result checking and exception correction—not only tool-running time.

2. Add introduction and recurring costs (Owner: Finance reviewer)

   Separate setup/training effort from recurring effort. Include incremental setup charges, subscriptions and usage fees for the chosen window. Count each cost once.

3. Calculate released capacity (Owner: Measurement owner)

   Tasks × (baseline active minutes − proposed active minutes) ÷ 60 gives gross hours. Subtract setup/training hours for net capacity in this window. Negative hours mean more effort, not a saving.

4. Reconcile realized cash (Owner: Finance reviewer)

   Identify an expense actually avoided or attributable additional contribution. Salaried time redeployed to other work can release capacity without reducing payroll. Keep the capacity valuation out of the cash-benefit numerator.

## Worked example: capacity improves, cash does not

Entirely synthetic assumptions for October–December 2026, in United States dollars (USD). No agency observation, vendor price or Decla outcome is represented.

| Measure | Assumed calculation | Three-month result |
| --- | --- | --- |
| Comparable volume | 240 tasks/month × 3 months | 720 reviewed internal drafts |
| Manual active effort | 14 preparation + 4 review + 2 rework = 20 person-minutes/task; 720 × 20 ÷ 60 | 240 hours; USD 9,600 at USD 40/hour |
| Proposed active effort | 4 preparation + 5 review + 3 rework = 12 person-minutes/task; 720 × 12 ÷ 60 | 144 hours; USD 5,760 at the same rate |
| Gross released capacity | 240 − 144 hours | 96 hours; USD 3,840 capacity valuation |
| Setup and training effort | 12 hours once × USD 40/hour | USD 480 effort valuation |
| Net released capacity | 96 − 12 setup/training hours | 84 hours; USD 3,360 capacity valuation |
| Incremental cash charges | USD 500/month × 3 + USD 200 setup charge | USD 1,700 |
| Capacity-valued balance | USD 3,360 − USD 1,700 | USD 1,660; not realized cash or a product result |

## Show the zero-realization case

Assume no payroll or contractor expense is avoided and no additional contribution is realized. The existing salaried staff perform the setup within already-paid time, so its USD 480 valuation is not an additional cash payment. Incremental cash benefit is USD 0; incremental cash charges are USD 1,700.

For this guide’s cash-only planning measure, return = (realized incremental cash benefit − incremental cash charges) ÷ incremental cash charges × 100. Here, (0 − 1,700) ÷ 1,700 × 100 = −100%, and the cash balance is −USD 1,700. This excludes noncash opportunity cost, financing, tax effects and the time value of money; it is not a complete investment appraisal.

If setup requires extra paid overtime, add that payment to cash charges. To count additional business, use attributable collected revenue less its incremental delivery costs, excluding costs already counted in this estimate. A larger pipeline is not collected income. Do not count the same released hours as both avoided labor expense and additional contribution.

When incremental cash charges are zero, leave the percentage undefined rather than dividing by zero. Report the cash balance and capacity separately.

## Test the assumption that could change the decision

Same synthetic 720 tasks, USD 40/hour, 12 setup hours and USD 1,700 cash charges. These balances value capacity; both cases still have zero realized cash benefit.

| Case | Human effort basis | Net capacity in window | Capacity-valued balance |
| --- | --- | --- | --- |
| Base assumption | 12 person-minutes/task, including 5 review | 84 hours after setup | USD 1,660 |
| Review takes longer | 16 person-minutes/task, including 9 review; preparation/rework unchanged | 36 hours after setup | −USD 260 |

## Source and calculation scope

The Agents Council for Technology (ACT) 2026 Tech Trends landing page recommends starting with workflows and structured role-based training. It supplies process context, not a time-saving or ROI benchmark. The calculations and task assumptions here are an original illustration; replace them with comparable observations and finance-reviewed costs before relying on an estimate.

Sources:

- [ACT Tech Trends: public workflow and training recommendations](https://www.independentagent.com/technology-trends-report/) — accessed 2026-10-06

## Frequently asked questions

### How do I estimate the return on investment (ROI) of AI automation for an insurance agency?

Estimate it in two views: the staff capacity a task could release and the cash benefit the agency could actually realize. Include preparation, review, rework, setup and fees over the same window. A dollar value assigned to time is not cash saved.

### What is Decla?

Decla is AI software for independent insurance agencies and brokerages. It connects to your AMS, email and carrier portals and does back-office work inside them. Your team reviews the work before it goes out.