AI in Insurance
Customer Suspicion of Insurers Using AI Softens
Insurance customers are growing increasingly comfortable with the use of AI in the sector, paving the way for insurers to further enhance products, customer experiences and operations, according to new research from Guidewire (NYSE: GWRE) today*.
The 2025 Guidewire European Insurance Consumer Survey shows that the daily use of AI among UK insurance customers has grown by 5 percent to 10 percent, while those using AI tools once to a few times a week has also climbed by 10 percent since 2024 to 16 percent.
UK customers familiar with AI are increasingly comfortable with the technology making insurance decisions without human intervention, with the total rising from 21 percent to 34 percent this year. The survey also revealed that in the UK:
- More than half (55 percent**) of insurance customers have used AI at least once – a figure that has decreased by 15 percent since last year.
- Just over one in three (34 percent) said nothing would give them confidence in insurers using AI.
- Just 9 percent are confident in how AI is used by insurers today.
- More than a third (34 percent) of customers expect that insurers using AI for customer interactions will also allow them to refer to a human operator if they disagree with the AI agent.
- More than one in four (26 percent) said that independent regulation of AI in insurance would enhance their confidence.
Charles Clarke, Group Vice President, Guidewire, said: “AI is set to revolutionise the way insurance companies operate, enabling them to improve customer experiences, increase automation and enhance security. “As more customers integrate AI into their daily routine, it is encouraging to see a growing confidence towards its use in the insurance sector, underscored by the demand for human oversight and regulation. While the industry continues to evolve and leverage advanced technologies to innovate, maintaining ethical standards and transparency in AI use will be crucial in enhancing customer acceptance and eliminating the trust gap.”
Commentary/Opinion
Modern Insurance Magazine - Insur-Tech-Talk
I had the pleasure of being interview by Modern Insurance Magazine's, Megan Kuczynski, Sr.Strategic Advisor for Insurtech Insights and Founder/CEO of ClimateTech Connect. We quickly covered Gen AI in insurance, regulations, work force impact and macro trends. See the snapshot on page 75. ARTICLE LINK
"I think it is helpful to be pragmatic and able to envision how any innovation and technology may work in the real world. It helps bring credibility to the table when helping my solution provider clients meet and do business with insurers. - Alan Demers, Founder InsurTech Consulting and co-curator 'Connected" Newsletter
News
Insured nat cat losses on trend to hit $145bn in 2025, says Swiss Re
Global insured losses from natural catastrophes are on trend to hit USD 145 billion in 2025, continuing a steady 5%–7% annual growth trend seen in recent years, according to reinsurance giant Swiss Re.
In their latest sigma report, Swiss Re noted that insured losses totaled USD 137 billion in 2024, with the increase largely driven by secondary perils such as severe convective storms (SCS), floods, and wildfires.
These types of events, which were once considered less significant, have now become major contributors to rising loss totals, underlining the evolving risk landscape facing insurers and reinsurers.
“Global natural catastrophe insured losses were on trend in 2024, coming in at USD 137 billion. The main drivers were Hurricanes Helene and Milton, and severe convective storms. Secondary perils made the biggest contribution to global losses, and the dramatic fires in Los Angeles in January this year point to another year of high losses from this category in 2025,” Swiss Re explained.
Triple-I/Milliman: U.S. P/C Insurance Reports Best Underwriting Results Since 2013, But California Wildfire Losses and Potential Economic Impacts of Tariffs Pose Challenges
The U.S. property/casualty (P/C) insurance industry reported a net combined ratio (NCR) of 96.6 in 2024 – a year-over-year (YoY) improvement of 5.1 points and the industry’s best underwriting performance since 2013, according to the latest report -- Insurance Economics and Underwriting Projections: A Forward View – from the Insurance Information Institute (Triple-I) and Milliman, a collaborating partner.
However, losses from the January California wildfires and emerging economic challenges from tariffs could weigh on industry performance in 2025, potentially offsetting recent momentum.
“While P/C economic drivers continue to outperform the broader U.S. economy – with stronger growth and lower replacement cost inflation – we now anticipate a shift in 2025 due to ongoing and expanded tariffs."
Personal lines narrowed the profitability gap with commercial lines, as both segments reported net combined ratios under 100 for the year.
Personal auto reported a 2024 NCR of 95.3, a 9.6-point improvement YoY, driven by double-digit net written premium (NWP) growth of 14.4% in 2023 and 12.8% in 2024.
Homeowners’ 2024 NCR of 99.7 marked an 11.2-point improvement over 2023, the first sub-100 result since 2019. The 2024 NWP growth rate of 13.6% was the highest in over 15 years, up from 12.4% in 2023.
'It's a gamble': Homeowners, experts testify on soaring property insurance
Property insurance rates a soaring due to climate change, a panel of homeowners and experts told senators Tuesday.
Diana Hill is paying nearly one month’s worth of Social Security benefits just to insure her Wilmington, N.C. property. She is considering whether to dial back her coverage to save money.
“Admittedly, it is a gamble, but a gamble that a senior on a fixed income must consider,” Hill, 84, told members of the Senate Committee on Environment and Public Works.
Led by the ranking minority member Sen. Sheldon Whitehouse, D-R.I., the committee held a hearing Tuesday titled, “Climate Risk, Crashing Markets: The Insurance Crisis Threatening the U.S. Economy.”
North Carolina suffered heavy damage from Hurricane Florence in September 2018, Hill noted, and Hurricane Helene in 2024. While only a Category 1 hurricane, Florence “dumped more than 30 inches of rain into Wilmington,” Hill said. Helene added further billions in damages.
Insurance companies responded by passing on the costs, Hill claimed.
“It's almost like we're on a pay-as-you-go plan,” she said. “We old timers paid when there was very little threat to insurance companies' bottom line, and now we're paying even more. Many of us seniors, if not hurting … are struggling to keep up with the cost of protecting our homes.”
Many insurance companies are no longer offering insurance in many high-risk areas of Florida and California. Or they are offering bare-bones policies that do not cover much. MORE
MGA Business Surges to $100 Billion as Fronting Carriers Spur Growth - Risk & Insurance
Triple-digit growth among top fronting carriers and evolving reinsurance strategies signal promising future despite performance headwinds in key lines, Gallagher Re reports.
Business handled by Managing General Agents (MGAs) reached almost $100 billion in premiums during 2024, as fronting carriers saw premium growth in excess of 20% in 21 of the last 24 quarters, according to a report from Gallagher Re.
Business handled by MGAs has demonstrated resilience and growth, now representing almost 10% of premium volume in the P&C market, the report states. And fronting carriers generated gross written premiums of nearly $28 billion in 2024, up 26% over the previous year, based on Gallagher Re’s analysis of a composite of 23 leading fronting carriers.
State National maintained its lead among the fronting carriers tracked by Gallagher Re with $4 billion in gross written premium, but the competitive landscape is evolving rapidly, the reinsurance broker said.
Transverse emerged as the fastest-growing fronting carrier in 2024 with a $1.1 billion increase in direct and assumed premiums, followed by State National at $870 million, and with Accelerant and Sutton National each adding $600 million. On a percentage basis, both Transverse and Sutton achieved triple-digit growth exceeding 100%, while Accelerant grew by 85%, Obsidian by 51%, Southlake by 41%, and Everspan by 40%, according to the report.
Despite increasingly overlapping appetites among fronting carriers, the market for MGA-produced business continues finding room for expansion, Gallagher Re reports. Many carriers are targeting similar business profiles: large MGAs with experienced underwriting teams, lower volatility classes of business, casualty opportunities, and E&S programs. This convergence hasn’t prevented fronting carriers from finding MGA partners and deployment opportunities as the overall segment grows faster than the broader P&C market, the report noted.
Cyber Risk
Google Says Hackers That Hit UK Retailers Now Targeting American Stores
Alphabet’s Google said hackers responsible for paralyzing disruptions of U.K. retailers are turning their attention to similar companies in the United States.
“U.S. retailers should take note. These actors are aggressive, creative, and particularly effective at circumventing mature security programs,” John Hultquist, an analyst at Google’s cybersecurity arm, said in an email sent on Wednesday.
The culprit is a group connected with “Scattered Spider,” a nickname for a loosely interconnected network of hackers of varying levels of sophistication, it added.
Scattered Spider is widely reported to have been behind the particularly disruptive hack at M&S, one of the best known names in British business, whose online operations have been frozen since April 25.
Financial Results
US surplus lines market sees continued growth amid P&C pressures: AM Best
AM Best, a credit rating agency, has released a new report showing continued growth in the premiums generated by non-admitted insurers within the US surplus lines market.
This rise in premiums highlights significant opportunities spurred by ongoing challenges in the property and casualty (P&C) sector.
The latest Best’s Special Report reveals that surplus lines insurers, reporting data to 15 state service and stamping offices across the country, saw a 12.1% increase in premiums year-over-year for 2024.
Over the last three years (2022-2024), premiums handled by these offices grew by 28.8%. The growth is largely driven by business lines that have been directly affected by macroeconomic pressures in the post-COVID landscape.
As with the broader property/casualty market, states like California, Florida, Texas, and New York continue to account for the largest share of premiums within the surplus lines market.
The report points out that even before the devastating wildfires in California earlier this year, severe weather, including heavy rains and mudslides, had already resulted in negative outcomes for admitted insurers providing homeowners and commercial property coverage.
Allianz confirms outlook following robust start to the year
Allianz has reported its highest-ever quarterly operating profit in Q1 2025, reaching €4.2 billion, an increase of 6.3% from the same period last year. The result represents 26% of the midpoint of the insurer’s full-year outlook.
Total business volume rose by 11.71% to €54.0 billion, up from €48.4 billion in Q1 2024, with contributions from all segments. Growth was led by the life/health segment.
Shareholders’ core net income remained steady at €2.6 billion, as higher operating profit was offset by a lower non-operating result and increased tax expenses. These taxes included a one-off provision related to the upcoming sale of Allianz’s stake in its Indian joint ventures. Adjusting for this provision, core net income increased by 5%.
Core earnings per share rose by 2.9% to €6.61. On an adjusted basis, the increase was 7%. Annualized core return on equity stood at 16.6%, or 17.2% when accounting for the tax provision. The Solvency II capitalization ratio remained stable at 208%, compared to 209% at the end of 2024.
Speaking on the results, CEO Oliver Bäte said Allianz’s first-quarter performance and reaffirmed outlook reflect its financial position and business model.
Telematics, Driving & Insurance
Distracted, Dangerous, and Deadly: Fixing America’s Driving Crisis
The challenge of making American roads safer and prevent accidents and fatalities continues despite recent progress. New NHTSA data reveals traffic fatalities decreased to an estimated 39,345 in 2024, down 3.8% from 2023 and falling below 40,000 for the first time since 2020.
While this is welcome news, we know that more can be done. Creating truly safe roads requires a comprehensive approach that addresses vehicle technology, transportation policy, and the risky behaviors that contribute to these preventable tragedies.
Vehicle technology and design have made great strides in making transportation safer, from automatic emergency braking, blind spot monitoring and lane departure warnings to vehicle designs that can better protect occupants in a crash.
Transportation policy can also make a difference. The Insurance Institute for Highway Safety (IIHS) recently unveiled an initiative called 30×30, which aims to reduce vehicle fatalities by 30% by the year 2030. This initiative advocates various actions to achieve that goal, including reducing maximum speed limits nationwide, adopting stricter seatbelt laws, among other transportation engineering initiatives.
Beyond safer vehicles and policy changes, we also need drivers to adopt less risky driving habits and behaviors. One of the biggest causes of accidents is distracted driving, particularly due in part to using phones while driving.
Commercial drivers represent a significant segment of road users whose experiences highlight broader driving safety concerns.
Protection Gaps
How are global protection gaps manifesting?
Whether for natural catastrophes or man-made perils, the existence of protection gaps is a pressing concern for the re/insurance industry. In a recent podcast, Guy Carpenter Europe’s CEO, Julian Enoizi (pictured left), and CEO of Global Analytics and Advisory, Dan Becker (pictured right), discussed how these protection gaps are manifesting – and pinpointed the key challenges concerning C-suite executives today.
What’s at the root of global protection gaps?
Outlining the variance that exists in protection gaps – which are defined as the difference between economic loss and insured loss – Becker highlighted that these can be a consequence of many different issues beyond just a lack of insurance for individuals. “Without an insurance ecosystem to invest in research, you end up in a situation where the risks are not as well understood or quantified, and resilience measures, things like building codes, which make risks easier to manage, are not as robust.
“But that said, protection gaps can emerge in developed markets where an insurance penetration is strong.” Offering a few examples of this, he noted that it can be difficult to secure full insurance protection if you live in an area with a dense concentration of exposure because insurers can't get diversification.
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Another example is in situations where the insurance pricing is higher than consumers are willing to pay, so they end up self-insuring, he said, with flood in the United States proving a very good example of that. “And perhaps the third example would be that insurers struggle to design products that cover systemic risks, things like financial crises or pandemics.”
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