Separating AI Sauce from Substance in Life, Annuity & Benefits Technology
In the Life, Annuity & Benefits software industry, the level of “AI Sauce" has been extremely high, but I have seen signs of less sauce and more substance in the market. I still talk to software product marketers feeling pressure to include "Gen AI" and "Agentic" buzzwords in their marketing no matter their solution. My go-to question is, "What do you use AI for, and if you don't, what would your unique selling proposition (USP) be if you did?" The answers range from well-defined value propositions to vague ideas like "It would be smarter!"
Jumping on the AI bandwagon without a clear value proposition can damage your brand and lead to costly, stalled sales cycles. For an AI capability to truly generate market interest, offer competitive advantage, and justify higher pricing, it must be relevant, valuable, and clearly more than just AI Sauce.
What is AI Sauce?
AI Sauce is the practice of labeling a solution as “innovative AI" merely to capitalize on hype, even when there's no substantial reason. Often, "AI players" simply repackage existing AI capabilities without significant added value, or they present development services as complete applications. While these can be legitimate uses of AI, they become AI Sauce when overhyped and falsely positioned as genuine innovation. Part of product marketing is positioning your product as modern in line with market trends but going too far kills credibility and deals.
I recently attended ITI 2025 in NYC, specifically looking for the AI Sauce level. The event's setup, with presentations surrounding the show floor, making it easy to see presentations and talk to vendors. Here's what I found.
Apologies for AI Mentions in Presentations
Most presentations mentioned AI, often with a disclaimer that it was a necessary topic for an Insurtech session in 2025. This created dissonance in sessions where AI wasn't truly central. One VC asked an expert in life policy administration where AI would have the greatest impact; the expert emphasized carriers' business needs for service or customer communications, implying life insurance policy administration is a deterministic process where AI adds little value currently.
Measuring Sauce Levels on the Vendor Floor
"A Nice Base for Your Recipe" Level: Some application vendors were primarily AI service providers with frameworks to either create customer applications or enable the customer to roll their own applications. This is legitimate, but some blurred the lines between these platforms and full SaaS applications, which is problematic when they have deeper discussions with customers or try to convince VCs that service revenue is really ARR.
"Drowning in Sauce" Level: Some vendors simply added common AI capabilities like document summaries to existing marginal solutions and called it innovation, or implemented business processes with AI that were less useful than traditional approaches. It is possible some of these players will learn and reset for more valuable solutions but that will require more self-awareness. One vendor showcased using ChatGPT for mail-merging claims letters. When asked what made it better than current Customer Communication Management (CCM) systems, the answer boiled down to "cooler and the power of AI". Right…
"Just Right" Sauce Level: Several AI vendors realistically assessed current and future AI capabilities. They marketed AI actively but emphasized source-grounded Large Language Models (LLMs), checks and balances for agentic AI, and appropriate applications of Generative AI versus other tools. Many prioritized "human-in-the-loop" processes, acknowledging AI's lack of independent judgment until Artificial General Intelligence (AGI) is achieved.
There is always going to be overhyped marking in the software business, but overall, I believe the general AI Sauce level is stabilizing in LA&H and serious players are focusing on tangible value and real problems AI can solve, rather than just adding AI Sauce.
