WTW’s 2026 Advanced Analytics & AI Survey asked 59 P&C insurers in the US and Canada, drawing insights from senior executives across analytics, actuarial, and strategy functions.

The survey found that insurers using more sophisticated analytics achieved combined ratios six percentage points lower and premium growth three percentage points higher than slower adopters between 2022 and 2024.

Laura Doddington, Head of Personal and Commercial Lines, Insurance Consulting and Technology, North America at WTW, said, “Advanced analytics and AI are beginning to yield significant payoffs, as lead carriers report measurable returns on investment. With insurers planning to ramp up investment across personal and commercial lines, advanced analytics is shifting rapidly from competitive advantage to essential requirement to maintain market viability and drive sustainable growth.”

Almost 80% of insurers now rely on advanced rating and pricing models, with an additional 11% planning to implement them soon, making predictive rating models almost universal.

Adoption of claims advanced analytics has been slower, with only one-third or fewer carriers currently using these tools for fraud detection (33%) or severity assessment (29%). However, these figures are expected to rise to 65–70% within the next two years. An additional 36% plan to introduce straight-through processing in claims workflow automation, up from the current 14%.

Although large language models (LLMs) and generative AI are relatively new to the insurance industry, over half of respondents report already using them, with another 29% planning adoption within the next two years. While only 16% currently use AI to augment human underwriting, this figure is expected to rise sharply, with 60% of insurers planning to prioritise this by 2028.

Survey respondents identified data concerns and IT bottlenecks as the main challenges in adopting advanced analytics. 42% cited data-related issues—such as poor quality and limited accessibility—and inadequate IT support as significant barriers.

Building an analytics-driven culture also remains a work in progress. Only 20% report having a well-defined analytics strategy to guide daily activities, and just 12% regularly offer analytics training to employees.

Doddington added, “The ability to harness advanced analytics and AI will increasingly define market relevance, operational efficiency, and strategic agility. At the same time, using AI tools without a solid foundation may exacerbate existing issues rather than solve them.

“Data quality and robust governance, combined with the capability to deploy analytics without hitting IT bottlenecks, are crucial for successful AI and machine learning adoption. Insurers that master these fundamentals will be best positioned to leverage these advanced tools and techniques to gain a competitive edge in an increasingly data-driven market.”

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The AI Liability Insurance is designed for small and medium-sized companies, which increasingly rely on AI to boost productivity, reduce costs, and stay competitive by automating routine tasks and analysing data.

The insurance covers AI-related losses that some General Liability policies exclude, including bodily injury, property damage, and advertising injury for claims stemming from AI-generated advertising, marketing, blogs, and social media.

“All types of businesses are using AI to do things more quickly and efficiently,” said Timothy Zeilman, global head of product ownership at HSB. “At the same time, the AI transformation brings new legal and financial exposures. Business owners may wonder, am I protected? AI insurance helps remove that uncertainty by filling the gaps in coverage, so businesses can stay ahead of emerging risks.”

The coverage protects organisations against lawsuits alleging a person is injured due to the insured’s use of AI. For example, it may apply if an AI-controlled HVAC system creates condensation on the floor, and a person slips and gets hurt.

It also covers claims for property damage due to the insured’s use of AI, such as if an employee of an appliance retailer uses an AI chat bot to generate instructions to install a dishwasher and causes a leak and extensive water damage.

Additionally, the policy covers legal actions claiming the insured’s AI tools violated a person’s right to privacy, slander, libel, or copyright infringement. This could include unauthorised use of content in a marketing brochure or defamatory statements in a blog or social media post.

The coverage will be added to the business policies of insurance carriers that partner with HSB, pending approval by insurance regulators.

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In its latest Verisk State of Insurance Fraud study, the company states that 36% of consumers would consider altering a claim image or document even if doing so breached insurer rules.

Verisk adds that insurers are simultaneously recording a sharp increase in manipulated media, with 98% agreeing that AI-driven editing tools are contributing to a rise in digital insurance fraud.

Verisk explains that it commissioned the research to assess how artificial intelligence is reshaping risk, decision-making and outcomes across the insurance landscape. The company presents its findings as evidence that technological capability is not only changing how claims are handled, but also how consumers perceive acceptable behaviour.

“AI editing tools are changing how people interact with digital content, and insurance is feeling that shift in real time,” commented Shane Riedman, president of Anti-Fraud Analytics at Verisk.

“Our concern is that many consumers don’t see small edits as crossing a line, but when those changes make their way into claims, they can materially affect outcomes. As manipulated media becomes more common, many insurers face growing pressure to establish clearer boundaries, improve visibility, and prevent fraud – while preserving a fair and efficient claims experience for policyholders.”

Verisk reports that AI editing tools are now widely accessible, easy to use and capable of producing highly convincing results. According to the company, 44% of consumers who have used such tools describe the output as “very realistic”, reinforcing how difficult it can be to distinguish altered content from genuine material.

Verisk further notes that exposure to AI-enabled manipulation is increasing, with 41% of consumers saying they know someone who has used these tools for financial gain, including in insurance-related scenarios. The company highlights that this rises to 64% among Generation Z and 54% among millennials.

Verisk states that 62% of consumers believe AI tools are used often or very often to manipulate insurance claim documentation. From the insurer perspective, Verisk reports near-universal exposure, with 99% encountering altered or AI-generated materials and 76% stating that such submissions have become more sophisticated over the past year. The company characterises this as a growing operational challenge that is making it harder to separate routine digital edits from deliberate fraud.

The findings from Verisk also point to what the company describes as a widening ethical gap. While many consumers express clear boundaries in principle, Verisk states that 36% would still consider editing a claim to improve its chances of success, despite rules prohibiting such actions.

The company highlights generational differences, reporting that 55% of Generation Z and 49% of millennials would consider making edits, compared with 28% of Generation X and 12% of Baby Boomers.

Verisk further notes that attitudes vary depending on the type of edit. The company reports that 52% of consumers consider adjusting brightness or contrast acceptable, while 49% are comfortable removing background elements.

However, Verisk draws attention to more serious behaviours, stating that 15% believe exaggerating damage is acceptable and 13% consider it permissible to create entirely false images of damage. The company presents these findings as evidence that increasingly sophisticated tools may be normalising actions that directly influence claim outcomes.

From an industry standpoint, Verisk reports that insurers are investing in detection capabilities as digital fraud becomes more advanced. The company states that 66% of insurers believe manipulated media fraud frequently goes undetected, prompting increased use of both third-party and in-house AI solutions. Verisk notes that 65% of insurers use externally provided AI detection tools, while 50% have developed internal systems.

Despite these efforts, Verisk indicates that confidence remains limited when dealing with more advanced manipulation techniques. The company reports that 58% of insurers feel very confident detecting edits to genuine images or videos, but this falls to 43% when assessing authenticity at scale and to just 32% when identifying deepfakes.

“Insurers aren’t standing still, but the threat is evolving faster than many systems were built to handle,” Riedman said. “Detection tools that aren’t fully integrated into claims workflows can create blind spots. As deepfakes and other AI driven manipulation become more common, the carriers will need more connected systems and shared intelligence to keep pace.”

Verisk emphasises that the impact of AI-driven fraud is expected to extend beyond individual claims. The company reports that 69% of consumers believe fraudulent activity will lead to higher premiums for all policyholders over time. Verisk adds that 42% cite rising premiums as a primary concern, while 36% point to the risk of legitimate claims being delayed or denied if altered documents are incorrectly flagged.

Looking ahead, Verisk states that insurers anticipate continued change over the next three to five years, including increased adoption of technology to counter fraud, greater regulatory consistency and stricter documentation requirements. The company also reports expectations of added operational pressure, longer claims processing times and higher premiums.

“This isn’t a problem any one insurer can solve in isolation,” Verisk’s Riedman added. “As digital manipulation techniques evolve and deepfakes become more prevalent, many insurers are under pressure to close structural and operational gaps and move toward more connected systems. Doing that effectively will require shared intelligence and better integration – not only to keep pace with increasingly sophisticated fraud, but to help ensure legitimate claims continue to be paid quickly and fairly, and trust in the claims process is preserved.”

Verisk states that the study is based on two national surveys, including 1,000 US consumers and 300 insurance claims professionals, designed to evaluate how AI editing tools are influencing consumer behaviour, fraud risk and insurer preparedness.

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Markel International forms part of Markel Group’s global insurance operations and provides specialist insurance solutions across a range of sectors and regions. The new role and organisational initiative reflect the company’s ongoing focus on strengthening internal capabilities and establishing a more structured approach to the use of artificial intelligence.

The AI Centre of Enablement will support the development and responsible use of AI across Markel International’s five business divisions. Positioned within the International Portfolio Analytics team, the centre will combine strategic guidance with technical expertise.

It will provide advisory support, training, governance and coordination while also developing AI applications designed to address specific operational needs. The team is led by Managing Director Simon Cooper-Williams.

Tomlinson will take on the new Head of AI position in addition to her current role as Senior Vice President of Operations for Markel in Canada. In this capacity, she will help guide the organisation’s AI strategy, work with senior leadership to identify areas where AI can add value, and oversee the implementation of related initiatives.

Based in Toronto, she will collaborate with the International Portfolio Analytics team, as well as colleagues in IT and Change Delivery, to support operational improvements and digital development across the division, with the aim of introducing tools that enhance services for brokers and clients.

Carys Lawton-Bryce, Chief Operations Officer, Markel International, commented: “At Markel, we see AI as a step‑change technology with the potential to support our ambitious profitable growth targets. We also recognise that this potential is only realised when AI is governed well, understood across the business and deployed responsibly. Our newly-launched Centre of Enablement will be central to how we leverage AI in a way that makes adoption safe, scalable and business-led, while ensuring responsible governance that stays ahead of regulatory expectations.”

Cooper-Williams added: “As an organisation, we’ve made significant progress with the adoption of AI. The new AI Centre of Enablement is a huge step in strengthening our operational foundations and continuing on our path of success. I’m delighted to have Maureen at the helm of this team as Head of AI, with her leadership and extensive knowledge of the business, having served as Senior Vice President, Operations in Canada since 2023.

“Operating from Toronto, Maureen’s appointment will also strengthen collaboration between all five international businesses as we look to bring greater consistency and clarity to how AI is developed and deployed, empowering teams with the tools and knowledge to deliver stronger outcomes.”

Maureen Tomlinson brings extensive experience in operations, technology and organisational change to her new position as Head of AI at Markel International.

She has served as Senior Vice President of Operations for Markel Canada since 2023, where she oversees the company’s technology strategy and the implementation of digital tools supporting policy administration and claims services. Her responsibilities include the management of technology platforms, data capabilities, pricing systems, operational processes and facilities that support service delivery.

Before joining Markel, Tomlinson spent more than a decade with Verisk, including its Canadian business formerly known as Opta Information Intelligence. From 2017 she held the role of Senior Vice President of Sales and Professional Services, leading teams responsible for delivering advanced analytics solutions to actuarial and underwriting departments across Canada.

Earlier in her career at Verisk, she held several senior leadership positions, including Vice President of Analytics and Research & Development and Vice President of Production Solutions and Operations.

Prior to that, Tomlinson held leadership roles at Economical Insurance Group, where she served as Director of Personal Lines Systems and Director of Business Services and Architecture.

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As part of the collaboration, AIG conducted a detailed review of McGill and Partners’ specialty portfolio, reportedly confirming its strength and quality.

Based on this analysis, made possible by McGill and Partners’ digital-first approach since its 2019 launch, AIG developed underwriting criteria to enable real-time underwriting through the broker’s digital platform.

AIG reportedly expects to deploy meaningful capacity of 25% across up to $1.6 billion of McGill and Partners’ Gross Premiums Written specialty portfolio.

McGill and Partners noted that its tech-enabled platform provided high-quality data and insights, enabling AIG to underwrite the portfolio and apply an agentic AI approach to manage its future performance.

McGill and Partners observed that by leveraging it digital broking platform in addition to Palantir’s Foundry platform, AIG will develop “comprehensive insights” on business underwritten, including near real-time exposure, limit deployment, modelled risk outputs and loss information.

The broker explained that this access to near real-time data analysis will allow AIG to manage the performance and deployment of AIG’s capacity to its clients on an ongoing basis.

“This strategic collaboration sets a new industry benchmark and significantly evolves the model for pre-secured capacity across a diverse specialty portfolio of risk,” McGill and Partners added.

Steve McGill, CEO, McGill and Partners, commented, “This collaboration has the potential to disrupt the dynamics of the subscription market.

“It strengthens the value proposition of leading underwriters in the market and redefines the way capacity is positioned in the best interests of our clients. This moves beyond incremental change and repositions the way the market operates in the future.”

Peter Zaffino, Chairman & Chief Executive Officer, AIG, said, “The rapid evolution of AI and large language models is reshaping risk analytics, giving us the ability to continuously learn from McGill and Partners’ portfolio and deploy capacity with greater insight, discipline and speed.

“By using McGill and Partners’ robust data ingestion capabilities along with Palantir’s Foundry platform, we are able to evaluate their portfolio to align with our risk appetite, and over time, we see significant opportunity to deliver greater efficiency to the subscription market while giving clients easier access to high-quality insurance solutions.”

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The survey included 350 C-suite participants, including more than 100 Chief Risk Officers, Chief Actuaries, and other senior thought leaders.

The findings highlighted the importance of technology risks related to AI, its potential for adverse outcomes, as well as the ongoing threat of disruptive technology. Some forms of disruptive technology have ranked among the top three emerging risks annually since the 2023 survey.

“This survey of key decision makers working with risks offers an insightful snapshot of their current concerns and the potential challenges these risks pose now and in the long-term,” said R. Dale Hall, Managing Director of Research, SOA. “The survey shows a shift from geopolitical and economic concerns in 2026 toward technology-driven risks three or more years out. The report also explores the interconnectedness of risks, and the possibility of risks migrating to other areas.”

Among C-suite participants, 34% identified an economic risk as the most impactful to their organisation in 2026, while 26% cited geopolitical risk.

Greater-than-normal financial volatility was identified as the top risk in 2026 (25%), followed by geoeconomic and globalisation shifts (19%), extreme weather events (14%), and AI adverse outcomes and cyber events (8% each).

17% of respondents selected economic risks as most impactful both in 2026 and three or more years into the future.

The most frequent first-selected risk combinations by risk category were two technological risks (14%), followed by 12% each for economic and environmental risks, and economic and technological risks.

Environmental risks, including extreme weather and long-term climate change, remain significant. However, compared with previous years, climate risks are increasingly seen as embedded and managed, rather than newly emerging threats.

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The HKMA, SFC, IA, and MPFA serve as Hong Kong’s key financial regulators, overseeing the banking, securities, insurance, and pension sectors.

The new programme builds upon the GenA.I. Sandbox introduced in 2024. The expanded Sandbox++ framework broadens participation across several parts of the financial sector, including banking, securities and capital markets, asset and wealth management, insurance, mandatory provident fund (MPF) schemes, and stored value facilities.

The initiative retains a focus on three priority areas: risk management, fraud prevention, and improvements to customer experience. It also promotes the concept of “AI vs. AI,” which involves using artificial intelligence tools to monitor and address risks arising from the adoption of AI technologies.

Financial institutions taking part will receive supervisory guidance from regulators along with technical support. Participants will also have complimentary access to graphics processing unit (GPU) computing capacity at the Cyberport AI Supercomputing Centre. This infrastructure is intended to help institutions design, test, and refine AI applications within a controlled environment, supporting responsible development across Hong Kong’s financial system.

The initiative is also expected to strengthen collaboration between regulators, financial institutions, and technology providers. It encourages the creation of both sector-specific and cross-sector AI solutions. Potential applications include AI-supported insurance underwriting and claims handling, automated assessment of suitability requirements in the distribution of investment products, and tools to assist with MPF administration.

Additional use cases under consideration include industry-wide solutions such as intelligent customer service chatbots and advanced systems for detecting and preventing fraud.

Eddie Yue, Chief Executive of the HKMA, commented: “The launch of the GenA.I. Sandbox++ marks a significant milestone under our ‘Fintech 2030’ strategy, reinforcing our commitment to building a vibrant ecosystem for responsible innovation. By bringing together regulators, financial institutions, and the tech community, we aim to unlock AI’s full potential to drive growth, efficiency, and customer-centricity across financial services, further strengthening Hong Kong’s competitiveness as a leading international financial centre.”

Julia Leung, Chief Executive Officer of the SFC, said” “Expanding the GenA.I. Sandbox to broader capital market participants is a true testament to our collective resolve to drive responsible market innovation and a tech-enabled and future-proof financial market. We encourage licensed corporations to actively participate in this Sandbox to harness the boundless potential of AI in enhancing operational efficiency, bolstering resilience and unlocking growth.”

Clement Cheung, Chief Executive Officer of the IA, added: “The GenA.I. Sandbox++ is a collective drive made by the financial regulators to nurture an environment conducive to AI innovation anchored upon accountability, inclusiveness and prudence. This thinking aligns with our AI Cohort Programme which has generated interest in knowledge sharing and use case deployment, while attracting an inflow of talents that should help to strengthen the competitiveness of Hong Kong as a regional AI hub.”

Cheng Yan-chee, Managing Director of the MPFA, said: “To further support the healthy and innovative development of AI in the MPF industry, the MPFA strongly encourages the MPF trustees and intermediaries to actively explore the adoption of advanced financial technology solutions. By leveraging AI, MPF trustees and intermediaries can enhance operational efficiency and elevate the quality of services, thus bringing more value to benefit MPF scheme members.”

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Speaking during the recent Digital Infrastructure Press Webinar hosted by Marsh, Mike Matthews, Global Digital Infrastructure Leader at Marsh, said that the unprecedented size and scale of today’s data centres make insuring these assets challenging.

“What we’re seeing right now is just sheer size and scope,” he said. “You have a $4 billion data centre with $10 billion worth of equipment in a single site facility. So, the size and scale is the challenge. And stacking that risk with multiple partners and carriers is obviously going to be the trend.”

Matthews noted that these projects require a lot of risk engineering upfront, including catastrophe modelling and site design.

“We talk about the acquisition phase—pre-development—so acquiring capital, land, power, tenant, you really have to evaluate all of that prior to making the investment as an investor. Getting that right upfront, looking at everything from the right EPCs, engineers, architects, designs, and proven technology, that all goes into that risk engineering process pre-insurance. And then all the capital in the reinsurance markets that we’re going to get creative with over the next few years, I think that’s going to be an integral part of the successful insurance modelling of these projects,” said Matthews.

Jeremy Goodman, Chief Client & Growth Officer for Guy Carpenter, the reinsurance broking arm of Marsh, reiterated that the data centre asset is insurable, but its coverage depends on whether insurers and reinsurers understand the risk, can quantify it, can measure the exposure, etc.

“The terms, conditions, coverage, and the capacity that is available will reflect the insurers and reinsurers’ knowledge and understanding of that particular asset,” Goodman explained.

He added, “Those that engage the insurers and reinsurers to help them understand how they’re approaching the project, how it’s going to be built, which contractors are going to be used and so on, will increase that comfort level. Overall, to meet a lot of the needs and the fast pace with which this is moving, there can be improved communication and engagement between the various different sponsors and principals, and the insurers and reinsurers, that will increase the knowledge, the understanding and the comfort level. As a result, I think that capital that is sitting on the sidelines, to some degree, within the reinsurance market will be more inclined to be able to come forward and deploy.”

Goodman emphasised that this will need to be done “a little more thoughtfully than it has in the past,” moving away from a site-by-site approach toward an interconnected ecosystem, enabling capital to be deployed at scale efficiently and sustainably.

During the webinar, Goodman also said that digital infrastructure represents one of the most significant capital deployment opportunities for the reinsurance market in a generation.

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The discussion featured Jeremy Goodman, Chief Client & Growth Officer for Guy Carpenter, the reinsurance business of Marsh, who outlined how the industry is adapting to the surge in large-scale digital infrastructure projects and the growing need for new insurance structures.

Goodman, reflecting on more than four decades in the insurance industry, highlighted how the role of data centres within the risk landscape has changed.

“The reinsurance market’s been underwriting data centres for decades,” Goodman said. “What has changed? It’s not the asset class, it’s the scale and the concentration.”

According to Goodman, the current development pipeline illustrates just how quickly the sector is expanding. “We’re currently tracking more than 1500 data centre projects globally, with over 900 of them still in planning, and more than 50 projects exceeding seven and a half billion dollars in capital,” he said, noting that many of these developments are clustered around major power hubs in the United States.

“That level of pipeline and capital intensity is unprecedented for what was historically viewed as a diversified commercial property segment,” he explained. “Digital infrastructure is shifting the diversified commercial property segment to more of a systemically concentrated infrastructure risk, and reinsurance needs to evolve from being transactional capacity to structural capital architecture.”

Goodman emphasised that while the nature of the asset class itself is not new, the magnitude of exposure has changed significantly.

At the same time, he pointed to the considerable amount of capital available to support the sector. “There’s an excess of $650 billion of dedicated global reinsurance capital, and that’s growing at roughly 10% year over year,” Goodman said. “About $125 billion of that capital now comes from alternative sources – pension funds, sovereign wealth funds, institutional investors – all seeking diversified asset classes.”

“So, the issue is not a shortage of capital,” he added. “The issue is how efficiently and intelligently we can deploy that capital and structure it.”

Ultimately, Goodman feels that “digital infrastructure represents one of the most significant capital deployment opportunities for the reinsurance market in a generation,” but he was quick to note that there are some shifts taking place.

One of the most significant structural changes involves the way large data centre campuses are being developed. “These large AI enabled campuses are clustering around constrained power nodes,” Goodman said. “These campuses share transmission infrastructure, substations, cooling systems, and often similar supply chains.”

This interconnected infrastructure means a single failure could affect multiple sites at once. “A single transform or a grid outage or extreme weather event can impact multiple campuses simultaneously,” he explained. “And given the size of these hyperscale campuses, the severity of loss escalates materially, both for property damage, delay in startup, and business interruption.”

As a result, reinsurers are increasingly assessing risks at an ecosystem level rather than looking at individual facilities. “Reinsurers are increasingly underwriting these ecosystems, not just the individual buildings,” Goodman said. “Data centres are no longer just large buildings, they’re concentrated power ecosystems.”

The market is beginning to respond with new insurance structures. Goodman pointed to “portfolio placements, sponsored risk pools and mutual structures that are supported by quota share and collateralised reinsurance” as examples of how capital can be deployed more efficiently across multiple projects.

Another development involves construction portfolio programmes. “We’re also seeing innovation in construction. Portfolio builders risk programmes can predefine eligibility criteria, engineering standards and risk controls across multiple projects,” he said. This approach allows developers to place several builds under a single framework rather than constructing separate insurance towers for each project. “When the projects scale, the insurance programme has to scale with them, structurally, not incrementally,” Goodman noted.

To conclude his opening remarks, Goodman said: “The market is not retreating from digital infrastructure, it’s innovating around it. And with more than 1500 projects globally, dozens exceeding seven and a half billion, digital infrastructure has become systemically important, and the strategic implications for the reinsurance sector are clear. It’s one of the largest capital deployment opportunities, but it requires a shift in mindset from transactional placement to structural capital architecture. From insuring buildings to underwriting interconnected infrastructure systems.

“The opportunity is significant. The capital exists. The challenge is our ability to structure intelligently, manage the aggregation rigorously and aligning deployment with multi-campus growth pipelines. And as digital infrastructure scales, risk capital must evolve from annually placement to strategic capital architecture.”

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The analysis, led by analysts including Andrew Kligerman, Daniel Bergman, Alfred Miller, Jeff Tong and Adittya Parthasarathy, examines the potential for AI-driven disruption across insurance and reinsurance distribution.

According to the analysts, while AI is expected to significantly influence how brokers operate, the core functions performed by intermediaries in complex commercial insurance markets remain difficult to automate.

TD Cowen says the brokerage sector entered the final quarter of 2025 under pressure from investor concerns about weakening pricing in the commercial property and casualty market. Global commercial P&C pricing declined by around 4% during the period, raising questions about the outlook for brokers’ organic growth.

However, the firm notes that brokerage companies still reported mid-single-digit organic revenue growth in the fourth quarter of 2025, which TD Cowen says indicates that underlying demand for broker services remains relatively resilient even as pricing softens.

TD Cowen also highlights a sharp market reaction earlier in 2026, when the commercial P&C brokerage sector experienced an average share price decline of around 9% following announcements of new AI-enabled tools designed for personal insurance purchasing. In the firm’s view, the market response reflected concerns that similar technologies could eventually bypass intermediaries.

The analysts say this reaction may have overstated the near-term implications for commercial insurance brokerage. TD Cowen emphasises that most large brokerage firms derive the majority of their revenue from complex commercial placements rather than personal insurance products, which tend to be more standardised and more suited to automated distribution.

Based on discussions with industry participants and technology specialists, TD Cowen concludes that AI is likely to alter the workflow of brokers but not eliminate the need for human expertise. The firm characterises AI primarily as a “force multiplier”, arguing that the technology is expected to support brokers by automating administrative tasks and improving analytical insight, while leaving key decisions in human hands.

According to TD Cowen, brokers’ role in assessing risk, negotiating terms with insurers and advocating for clients in claims situations depends heavily on experience, judgement and established relationships. The analysts say these elements are difficult to replicate fully through automated systems.

The report also argues that the impact of AI will differ significantly across insurance segments. TD Cowen suggests that personal lines and very small commercial policies may be more exposed to automation because they involve relatively simple and standardised risks. In contrast, the firm says middle-market and large commercial insurance placements involve more complex and bespoke structures, making them less suited to full automation.

TD Cowen identifies the excess and surplus market, along with specialist wholesale brokerage, as particularly resistant to technological displacement. The analysts note that policies in these segments often contain customised coverage structures, evolving exposures and negotiated terms that require ongoing human involvement throughout the policy lifecycle.

The firm also points to structural characteristics of the commercial insurance market that may slow the pace of AI-driven disruption. TD Cowen highlights regulatory requirements such as licensing, audit trails and claims authority as factors that limit the ability of automated platforms to replace licensed intermediaries entirely. The analysts therefore expect hybrid operating models to develop, where AI systems support brokers rather than replace them.

While the firm does not expect widespread disintermediation in the medium term, TD Cowen says AI is already beginning to influence brokerage operations. The analysts point to automation of parts of underwriting submissions, improved efficiency in placement workflows and better matching of risks with insurer appetite as examples of areas where the technology could improve productivity.

TD Cowen also argues that larger brokerage firms may be particularly well positioned to benefit from AI adoption. According to the analysts, effective AI systems depend heavily on proprietary datasets generated from large volumes of transactions and interactions with both clients and insurers. Firms with extensive data, strong relationships and significant capital resources may therefore have advantages in developing and deploying AI tools.

In the analysts’ view, this dynamic could reinforce the competitive position of established brokers rather than enable smaller entrants or start-ups to displace them.

The report also examines broader trends in insurance distribution, noting that direct-to-consumer channels have expanded in certain areas. TD Cowen highlights personal motor insurance as an example, where direct distribution has increased from approximately 16% of sales in 2009 to about 30% by 2024.

Even so, the analysts say other segments have remained far less affected by direct distribution. In life insurance, for instance, TD Cowen notes that direct channels account for only around 5% of individual policy sales in the United States.

Despite recent pressure on brokerage share prices, TD Cowen believes market valuations may reflect overly pessimistic assumptions about both pricing trends and technological disruption. The analysts state that their discounted cash flow modelling, which assumes near-term free cash flow growth of roughly 7.5% over five years followed by 1.5% long-term growth, suggests an average potential upside of around 19% across broker stocks.

While acknowledging that the longer-term impact of AI remains uncertain, TD Cowen concludes that the technology is more likely to increase efficiency and productivity within the brokerage industry rather than eliminate the intermediary role.

According to the firm, the recent sell-off in broker stocks appears to reflect concerns that may prove overstated, although the analysts note that the sector could continue to experience some short-term volatility.

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