AI creates efficiencies, won’t replace underwriters: E&S executives

SAN DIEGO – Generative artificial intelligence is already speeding up the submission and underwriting process in the excess and surplus lines insurance market, but human judgment remains key, E&S executives say.

The technology can be used to gather and quickly analyze vast quantities of data, but it remains a tool to assist underwriters and intermediaries rather than be their replacement, the executives said during interviews at the Wholesale & Specialty Insurance Association annual conference held this week in San Diego.

Many companies have introduced or are in the process of introducing AI tools. Although there are fears about how AI could inadvertently discriminate against some policyholders and concerns over privacy, executives at WSIA were largely positive about the technology’s prospective impact on the market.

“AI really allows us to speed up the process and accelerates our ability to get to every single account that comes in the door, especially on the delegated underwriting authority side,” said Tim Turner, chairman and CEO of Ryan Turner Specialty, the wholesale brokerage unit of Chicago-based Ryan Specialty Holdings Inc.

AI enables underwriters to process information more quickly, particularly on lengthy coverage submissions, said Alex Blanco, Philadelphia-based CEO, insurance, at Vantage Group Holdings Ltd.

“We can summarize information a lot easier. If the underwriter chooses to go through a 20-page Word document, they’re privileged to do so, but this at least gives them a synopsis and a review of the information,” he said.

And they can then use prompting features of AI to explore the information in the documents, Mr. Blanco said.

AI can help underwriters visualize and analyze data quickly, but it does not replace human judgment, said Lucy Pilko, New York-based CEO for the Americas region of Axa XL’s insurance operations.

“We will keep investing in the things that provide the insights at (underwriters’) fingertips so that they can use their expertise across a broader portfolio,” she said.

The technology can help insurers reduce the expense ratio component of their combined ratios, but its role in reducing their loss ratios will be more restricted, said Liz Kramer, president of E&S at Munich Re Specialty North America.

“We have to invest in advanced analytics around risk selection and making better risk-informed decisions, but we’re never going to automate the loss ratio component. We always want a human element,” she said.

The technology helps underwriters get to the “judgment phase” quicker, said Matt Dolan, president, North America specialty, at Ironshore and executive vice president at Liberty Mutual Insurance Co.’s global risk solutions business.

But the information generative AI tools use is not always up to date, he said.

“Underwriters are on the ground every day thinking about the risk environment as it exists today in real-time and where it’s going. The combination of synthesized data and good, sophisticated underwriting judgment we think is a great combination,” he said.

Insurance has become a “line item” for many businesses, and the cost has to be justified, said Russ Stein, Scottsdale, Arizona-based area executive vice president at Risk Placement Services Inc., the wholesale unit of Arthur J. Gallagher & Co.

AI and other technology can be used by wholesalers to provide information that assists retailers and buyers in that task, he said.

“We need to be better equipped with the data to explain what’s driving the cost, why it’s driving the cost, and what they can do,” he said.