Artificial Intelligence (AI) is increasingly transforming the insurance industry, enhancing underwriting processes and the overall value chain. AM Best reports that while AI boosts efficiency and accuracy, leading to potential productivity improvements and reduced human intervention, it’s premature to attribute current job losses in the industry solely to AI. The recent layoffs are more cyclical than structural, with personal lines writers facing pressure from loss cost inflation, reinsurance issues, and climate risks. As AI’s capabilities grow, the technology is expected to impact a wider range of insurance occupations, potentially lowering premiums and offering greater coverage flexibility, benefiting both insurers and customers.
A UK study revealed that a significant number of insurance executives foresee AI potentially replacing their roles, with mixed feelings of curiosity and apprehension about this technology. AI’s scope isn’t limited to underwriting but extends to customer service, policy generation, claims handling, and more, thanks to large language models and data analysis capabilities. AI can provide real-time risk assessments and facilitate rapid response to market changes, enabling tailored policy pricing based on individual risk profiles. However, the disruption brought by AI also raises concerns regarding data privacy and security, especially in handling sensitive consumer data, which could hinder its broader adoption in the insurance sector.