Tough quarter for insurance M&A in face of tariff turmoil predicted  April 8th 2025

Expert looks at range of insurance industry trends as AI takes hold

With the advance of AI, the rapid change in markets, and ongoing challenges, the insurance industry is carving out new strategies at different levels as it adapts and strives for growth.

There is an ongoing trend of larger insurance brokers shedding underperforming assets in favor of diversifying their product landscape, finding cross-sell opportunities and pursuing strong adjacencies, David Crofts, insurance M&A lead, West Monroe Partners, said.

“I think what the larger brokers have done is tried to grow into the market as quickly as possible through M&A and have made a lot of bets on sort of non-core strategies. A lot of them have been technology or just trying to diversify the product landscape that they’re serving with the business case that they could do some significant cross-sell,” Crofts told InsuranceNewsNet.

Meanwhile, the lower middle market is increasingly exploring Managing General Agents (MGAs).

“The lower mid-market ones and the smaller, lower mid-market ones are looking at MGAs and trying to either build MGAs from the ground up, acquire decent MGA assets that are out there or, in a handful of cases, trying to carve out or lift out MGAs or underwriting teams out of carriers. I think that’s a trend that will continue; there’s just strong market support for that,” he said.

Additionally, the AI trend in insurance is spilling over into market activity, as Crofts said more data-enabled brokers will be successful in this space.

New Survey Looks at Consumer Response to AI Insurance Decisions

Global consumers unanimously acknowledge the benefits of deploying artificial intelligence (AI) tools in insurance yet are skeptical about their commercial rollout.

Despite high satisfaction among users of AI tools, insurers must address trust issues and prioritize transparency, especially around AI-driven decisions and data privacy. Building consumer confidence will be key as AI becomes more integrated into insurance operations, according to a survey by GlobalData, a leading data and analytics company.

According to GlobalData’s 2024 Emerging Trends Insurance Consumer Survey, there is a strong belief that AI can reduce queueing times to speak to insurance agents as cited by 73.8% of consumers. Meanwhile, a slightly lower proportion of consumers believe the use of AI can result in operational efficiencies (71.5%), while also citing the technology is better at pattern recognition than humans (71.2%).

Beatriz Benito, Lead Insurance Analyst, GlobalData, comments: “Despite the positive perceptions, insurers face challenges in ensuring consumers adopt AI tools. Many consumers find that the technology is not yet sufficiently developed to be adopted at scale, eroding their trust. To overcome these trust issues, insurers must prioritize transparency in AI-driven decisions, particularly among those who perceive bias in the tools, such as providing negative claim outcomes. Some consumers will have data privacy concerns, while others will simply just prefer interacting with a human.”

Despite skepticism surrounding the use of AI tools at a commercial scale, satisfaction levels among the customers using such tools are high. The survey reveals that 74.5% of customers using insurance chatbots were either satisfied or very satisfied by the experience.

How AI Is Changing the Claims Landscape: Speed, Accuracy and a Human Touch

The hope that workers’ compensation adjusters can get long-needed relief with the assistance of generative AI appears to be well-founded.

AI technologies are advancing rapidly and changing many aspects of the insurance industry, particularly in claims management. Generative AI applications can improve efficiency, communications, and customer experience by getting to resolutions faster.

However, adopting AI is not without challenges.

Experts note that AI outputs are only as good as the data they work off of and that companies must continually train and refine their models for the best outcomes. Insurers also need to know the limits of their AI, designate leaders to manage and govern the technology, and ensure that it is used with the right balance of humans in the process.

What is clear is that AI is moving so rapidly that stakeholders who are not keeping up will fall behind fast, said Jeff Gurtcheff, chief claims officer at CorVel Corporation.

“In some respects, there is a race to see who’s first to use it to its full potential. It will enable adjusters to handle a lot more than they have in the past. Companies that do will have significant advantages not just in results but in profitability and efficiency,” he said.

Big Opportunities in Claims Management and Handling

AI has experienced tremendous growth in recent years and is projected to contribute nearly $20 trillion to the global economy by 2030, according to IDC.

Generative AI, a subset of AI that goes beyond analyzing information to creating content like text, images, and video, has opened AI to the masses with more applications. Software developers now use generative AI chatbots like ChatGPT and Microsoft Copilot to provide AI applications to nearly every industry, from banking and real estate to health care and hospitality.

Craig Guillot

AI vs AI: Firms need to step up their cyber game or risk falling to threat actors

AI is nothing new to insurance, particularly in the cyber world. However, the rapid evolution of cybercrime and ransomware attacks means organizations must consistently level up, not just to stay competitive but to survive.

Cowbell’s Roundup Report 2024 found that larger businesses — those with annual revenues exceeding $50 million — face significantly greater cyber risk, experiencing 2.5 times more cyber-related incidents than their peers.

Speaking to Insurance Business, Rajeev Gupta, co-founder and chief product officer at Cowbell, described AI as a double-edged sword. While it presents challenges, it's also a critical tool that organizations need to embrace.

“Using AI to detect fraudulent claims, for example, is no longer a nice to have, it’s a necessity. Because the bad guys are already using it,” Gupta said. “Claims are coming in with AI-crafted documents. Someone can easily create what looks like a legitimate ransomware attack, but all the artifacts are AI-generated. If a human is evaluating that claim, they might believe it’s real. That’s where we need AI. And if insurance companies aren’t using it, they’ll end up on the losing side of the battle.”

The insurance revolution: AI and the future of risk | Insurance Business Canada

The insurance industry isn't just changing - it's being fundamentally rewritten. The rise of artificial intelligence (AI) and the Internet of Things (IoT) isn't simply adjusting traditional risk models; it's significantly altering them.

"We're sitting on the shore, watching a large wave approach," said Ali Tahmoorespour (pictured), a broker at InsureBC. "Instead of preparing to surf and utilize the approaching wave, we risk being overwhelmed. If we, as insurers, don't leverage AI and the technologies we now face, the technology sector will overtake us. Therefore, instead of wasting time, we should act quickly to leverage this new technology."

For decades, insurance pricing relied on broad demographic factors—age, gender, location—because there was no way to track individual risk in real-time. Now, insurers can utilize telematics in cars, wearable health monitors, and digital footprints—every detail can be collected and analyzed.

This data allows insurers to offer usage-based insurance (UBI) policies, tailoring premiums more closely to individual driving habits. Studies indicate that the UBI market has experienced significant growth, with approximately 20 million policies in effect and projections estimating the market's value to reach over $190 billion by 2026.