News
Trump orders political risk insurance backstop for energy security in Persian Gulf
In an intervention aimed at stabilising global energy flows and easing maritime security risks, President Donald Trump has directed the United States
In an intervention aimed at stabilising global energy flows and easing maritime security risks, President Donald Trump has directed the United States Development Finance Corporation (DFC) to extend political risk insurance and financial guarantees for all maritime trade, particularly energy cargoes transiting the Strait of Hormuz.
The move, announced via social media, specifically targets the “financial security” of energy cargoes.
President Trump stated that the DFC would offer these guarantees at a “very reasonable price” to all shipping lines, effectively creating a federal backstop for a region currently deemed too volatile by many private insurers.
He added that, “if necessary, the United States Navy will begin escorting tankers through the Strait of Hormuz as soon as possible,” reinforcing his government’s objective of maintaining an uninterrupted global energy supply chain.
Reports indicate that tanker transits through the Strait of Hormuz have largely slowed or halted following the escalation of conflict in the Middle East.
How State Farm, USAA Boost Customer Retention: Historic Dividends
How State Farm, USAA Boost Customer Retention: Historic Dividends
While competition in personal auto insurance is rising to levels high enough to dent customer retention at GEICO, a giant mutual insurer and a reciprocal exchange have both tapped into a customer-friendly option unavailable to large stock insurers.
State Farm and USAA recently announced multibillion-dollar policyholder dividends that are “historically large” for the industry and the companies, S&P GMI noted in a research note this week. > “These dividends, unique to mutual and reciprocal exchange business models, aim to enhance customer retention amid rising competition,” S&P GMI said.
State Farm is set to return $5 billion to policyholders via dividends, the insurer announced last week. That represents 7.2% of State Farm’s estimated 2025 private auto net premiums earned of $69.4 billion.
At USAA, roughly $4 billion of dividends going out to members in 2025 represented a higher percentage of the military insurer’s auto earned premiums—nearly 10%, according to S&P GMI’s calculations. MORE
AI in Insurance
AI Recommends Using Nuclear Weapons | Insurance Thought Leadership
We've all had a chuckle about the occasional hallucination by generative AI: the time when it recommended using glue to keep cheese from sliding off a piece of pizza; when an Air Canada chatbot promised a passenger a bereavement fare despite a policy to the contrary, and the airline had to live up to that promise; when a lawyer unknowingly submitted a brief to a judge that was based on citations from court cases that never happened; and so on.
But a couple of recent stories go well beyond the chuckle level. While generative AI continues to show all the promise in the world, these stories demonstrate consistent problems that, unchecked, would lead to severe consequences.
Let's start with the one about war games in which large language models almost always recommended escalating to nuclear weapons.
As Axios reports, a researcher at Kings College London pitted three popular LLMs — GPT-5.2, Claude Sonnet 4 and Gemini 3 Flash — against each other in 21 war games in which the AIs acted as the leaders of major nations. The scenarios included threats to survival, but also included lower-stakes conflicts, such as border skirmishes and resource competition. Yet 95% of the time, at least one of the LLMs "used" nuclear weapons, and escalation typically ensued.
The other article that caught my eye relates to ChatGPT Health. The app, launched in January, is consulted by some 40 million people every day — and a study found the potential for major problems with the app's diagnoses. For more than half of the study's hypothetical patients who should have sought immediate medical care, ChatGPT Health told them they should stay home or wait to schedule a regular appointment with a doctor.
The article, in the Guardian, said: "In one of the simulations, eight times out of 10 (84%), the platform sent a suffocating woman to a future appointment she would not live to see.... Meanwhile, 64.8% of completely safe individuals were told to seek immediate medical care." COMPLETE COMMENTARY
$15 billion of the insurance industry is at risk from AI, BofA says | Fortune
BofA accused the insurance industry of clogging its ranks with tons of unnecessary salespeople, with a “snowball effect” about to start happening.
Investors who shrugged off last month’s artificial intelligence (AI) scare in the insurance sector might want to brace themselves for a reality check. A new report from BofA Global Research estimates more than $15 billion in insurance industry commissions are considered “low complexity” and face a not immaterial risk of AI disintermediation. In other words: a real possibility.
The warning comes on the heels of a volatile period for insurance broker and agent stocks. On Feb. 9, the subsector plunged 9% following news that two digital insurance companies—U.S. auto comparative rater Insurify and Spanish homeowners insurer Tuio—had launched chatbot assistants utilizing ChatGPT technology. However, over the next three weeks, insurance distribution stocks rallied 7%, outpacing a broader S&P 500 decline of 1%. The marketplace appeared to digest the AI threat and decided it was not a material risk to revenue growth, adopting a broadly optimistic “nothing to fear” and “far away” sentiment. BofA disagrees.
“Our view is that large language model digital agents can effectively do a non-immaterial portion of the work currently provided by 20-30k independent agents across the United States,” the BofA report stated.
The core of the firm’s bearish thesis centers on a massive pool of routine, low-complexity insurance policies. The BofA analysts, Joshua Shanker, Joseph Tumillo, Cyril Onyango, and Fatima Keita, looked at just six major carriers catering to small businesses and personal lines: Travelers, Hartford, Progressive, Cincinnati Financial, Hanover, and Selective. From these six companies alone, BofA identified over $15 billion in commissions paid to independent agents in 2025 that largely skew toward low-complexity risks.
Commentary/Opinion
AI Isn’t the Future of Claims. It’s the Present
AI did not arrive with a single transformational moment.
Delaying adoption creates real competitive risk, widening gaps in severity management, settlement outcomes, expense control, workforce productivity, and market credibility. AI maturity is increasingly separating leaders from followers.
There is a persistent misconception in claims that artificial intelligence (AI) represents the future of the industry. That belief exists largely because AI entered claims quietly. It did not arrive with a single dramatic transformation moment. Instead, it was introduced through practical use cases that improved workflows, triage, and decision support. Today, the question is no longer whether AI will be used in claims. The responsibility now rests with claims executives to decide how it will be leveraged, how adoption will be led, and how it aligns with organizational strategy.
AI is no longer a side initiative nor experimental. It has become a core claims capability. Just as a digital first notice of loss, straight-through claims processing, and analytics evolved into foundational infrastructure, AI now belongs in the modern claims operating model.
As organizations move from experimentation to operationalization, the way AI is designed and deployed becomes just as important as the decision to adopt it. Without a deliberate strategy, organizations risk fragmented tools and suboptimal outcomes. At the same time, AI does not replace claims judgment. The human element remains essential to fairness, credibility, and defensible decision making. The strongest organizations position AI as a decision enablement capability that allows professionals to work smarter, faster, and more consistently. By elevating insights across the team, AI can raise overall performance to mirror that of the best performers.
Jim Sorrells
Building insurance resilience through strategic flexibility - WTW
Rigidity is risky
In a world of constant change, true strength for insurers no longer comes from structural rigidity, but from the ability to bend without breaking. Flexibility isn’t just a nice-to-have; it’s a strategic imperative. The capacity to adapt in real time determines whether an insurance business survives or maintains the resilience to thrive.
The strategic value of flexibility
Flexibility in insurance technology means breaking free from rigid systems. It represents the freedom to adapt products, pricing, and processes with minimal cost and disruption. Crucially, it lets an insurer apply a consistent core approach across different parts of the business without redundant rework each time.
When insurers move beyond “boxed-in”, rigid software, they can respond faster to emerging trends and customer needs.
Want to tweak an underwriting rule for a niche segment or plug in a new data source?
With a flexible platform, these are minor adjustments instead of major IT projects.
This adaptability lets insurers respond swiftly to competitive pressures, regulatory changes, or unexpected events.
Research
Supply Chain Paralysis and Internet Outages Emerge as Top Business Black Swans
Allianz survey finds more than half of risk managers view cascading supply chain disruptions as the most plausible Black Swan event for their companies.
More than half of risk management professionals worldwide believe global supply chain paralysis from geopolitical conflict represents the most plausible Black Swan event facing their organizations, according to a survey by Allianz Commercial.
The survey of 3,338 business and risk experts across nearly 100 countries found that 51% ranked supply chain paralysis first among highly disruptive events that were considered “most plausible” for their company within the next five years, followed by 47% citing a global internet outage caused by a major cyberattack or communications failure. The third most likely Black Swan scenario is the sudden collapse of a major financial institution or sovereign debt crisis/government fiscal instability, cited by 30%.
Geopolitical Instability Drives Black Swan Concerns
The top three scenarios reflect immediate vulnerabilities in today’s hyper-connected business environment, where geopolitical volatility, trade tensions, and concentrated digital infrastructure create unprecedented systemic exposure, according to Allianz Commercial.
“Black Swan events are now more likely — and far more consequential — than a decade ago,” explains Michael Bruch, global head of risk consulting advisory services at Allianz Commercial. “As physical and digital supply become tightly interwoven, disruptions now cascade at unprecedented speed.”
Sedgwick launches new future-ready property claims report
Sedgwick, the world's leading risk and claims administration partner, has launched a new report focused on future-ready property claims: leveraging technology and AI for strategic advantage. The report is designed to guide property carriers as AI adoption accelerates across claims, and to explore what it takes to scale automation, orchestrate workflows, and fully realize AI's value across the claims lifecycle.
"AI is rapidly reshaping property claims, yet speed alone isn't enough. Sedgwick's latest report explores how carriers can move beyond experimentation to strategically scale automation, orchestrate workflows, and realize AI's full potential across the claims lifecycle," said Scott Richardson, President, Property of Americas, Sedgwick.
Key findings and data in the full report include:
- While 58-82% of carriers use AI tools in their operations, only 12% of carriers claim to have fully mature AI capabilities, and only 7% have achieved scalable AI success
- 75% of claims professionals believe AI needs human oversight.
- Widespread AI adoption hasn't translated into maturity for carriers, with fragmented tools and inconsistent data often limiting AI's impact.
- Automation is valuable for high-volume, low-complexity tasks, but human expertise remains critical for complex and sensitive losses.
"AI is accelerating faster than any technology in our lifetime. Strategy isn't optional, it's the new competitive advantage Long-term success, ROI, and impact from AI lies in how carriers leverage this technology," said David Gauragna, Managing Director Property, Sedgwick.
State News
Va. bills say credit shouldn't be factor in auto insurance
The Senate bill sailed through that body with a 36-1 vote, but the House of Delegates version, House Bill 1228, was tabled early in the session. After another look at the Senate bill and a rare vote...After a second rejection, an extremely rare third look at legislation is so far keeping alive a bill aimed at reining in a controversial auto insurance practice.
The legislation, Senate Bill 693, says insurance companies can't refuse to cover drivers or charge different premiums for coverage solely because of an individual's credit.
The Senate bill sailed through that body with a 36-1 vote, but the House of Delegates version, House Bill 1228, was tabled early in the session.
Death by a thousand cuts, as roughly 1,000 bills die in Virginia General Assembly "I think mine came on a bad day in the calendar," said Del. Israel O'Quinn, R-Washington County, the House bill's sponsor, after the House Labor and Commerce Committee changed its mind last week about tabling the Senate bill.
His was among 35 bills on the House committee's agenda on the day it was tabled and was the only one to meet that fate.
After another look at the Senate bill and a rare vote calling it back from having been tabled, the committee's insurance panel then decided on a 6-1 vote to move the Senate bill on.
"Whether someone goes through divorce, has a bankruptcy, someone has shared family debts, that does not affect whether they're a great driver or not," said state Sen. Emily Jordan, R-Isle of Wight, who sponsored the Senate bill.
"I think their driving record does, so what this bill does is make sure that this is not the sole basis for what I personally feel like is unfair discrimination for someone that may have experienced a hardship," she told the House panel.
Webinars/Podcasts/Interviews
Insurance technology trends: AI & personalization - Agency Forward® - Nationwide
From the rise of AI to the growing demand for hyper-personalized experiences, learn how insurance technology trends are creating powerful new opportunities.
At the start of 2026 the insurance landscape is evolving at a remarkable pace. From the rise of artificial intelligence (AI) to the growing demand for hyper-personalized experiences, we’ll explore the future of insurance by gathering insights from a panel of industry experts. Learn how agencies and carriers can leverage technology to enhance the customer journey, improve risk prevention, and unlock greater operational efficiency. Our panel includes:
- Mimi Chizever, Vice President for Emerging Technology, Nationwide
- Swathi Jillella, Director, Emerging Technology Research and Exploration, Nationwide
- Judy Sivy, CEO, ProtectALL Insurance
- Jason Walker, President, Agency Revolution
When it comes to risk prevention, what technology do you see clients and carriers embrace the most? Where do you think there is opportunity?
Mimi Chizever: We are seeing strong traction in risk prevention with Internet of Things (IoT)-powered solutions, particularly telematics and smart-home ecosystems, because they are relatively easy to deploy and do not require a full operational overhaul. In personal and commercial vehicles, telematics gives us and our customers real-time insight into speed, braking, distraction, and route risk, which enables usage-based insurance, safer-driving coaching, and faster, more objective claims handling. In homes, smart IoT devices such as water-leak sensors, automatic shutoff valves, smoke and CO detectors, temperature and humidity sensors, and connected security help prevent or reduce losses from fire, water, and theft, often paired with premium credits, subsidized devices, or installation support. INTERVIEWS CONTINUE
How Insurtech Startup Applies Founder Mindset for Success
Matthew Lu and David Tyson, founding leaders at the insurtech platform Reserv, share how their BCG experience shaped the build and leadership of a high-growth startup modernizing insurance claims through AI and automation.
Reserv is an insurtech company and technology-enabled third-party administrator based in the United States and United Kingdom that specializes in modernizing property and casualty insurance claims processing through AI and automation, making data science, reporting, and APIs easily accessible and consumable for claim leaders, underwriters and partners alike.
To start, please talk about how you both had the opportunity to confound a startup as a four-person founding team. What sparked the idea for founding Reserv, and how does someone find their way onto the founding team of a company at such an early stage?
Matthew: Getting to be a founding team member is a lot like surfing: half of it is putting in the effort to paddle out to the surf break and the other half is serendipity, being at the right place at the right time on that surf break.
David: I’m a runner, not a surfer, but I share Matthew’s sentiments! For me, becoming a founding team member at Reserv comes down to sustained effort, earning trust over time, and consistently driving real impact regardless of the role. Our paths to Reserv weren’t defined by any single moment, but rather by a series of intentional experiences where we built credibility through high-quality work.