The insurance industry dates back to ancient Babylon and China, where merchants would pool their resources to protect themselves against losses from piracy and theft. The concept landed on the U.S. shores in 1752, when Benjamin Franklin co-founded the first insurance company in Philadelphia. Since then, the industry has grown to become a massive global enterprise.
According to Insurance (Providers, Brokers and Re-Insurers) Market Global Report 2022, the global insurance market is estimated to grow from $5.38 trillion in 2021 to $8.39 trillion in 2026.
The industry needs sharp efficiency improvements to combat inflation, which skyrocketed from 1.23% in 2020 in the U.S. to 8% in 2022 during the COVID-19 pandemic, consequently increasing the costs of paying claims. Furthermore, due to climate change, population growth and migration to vulnerable areas such as coasts and river floodplains, there were 60 $1 billion natural disasters in the U.S. in the last three years, which is already nearly half of the 128 in the entire previous decade (2010-2019), and those numbers are inflation-adjusted to 2022 dollars.
Technology has the potential to offset these rising costs. The insurance industry needs to adopt a "human in the loop" model for rapid adoption of technological advancements in artificial intelligence.