Insurance and AI: A New Era of Precision

The insurance industry is undergoing a significant transformation, driven by the increasing use of Artificial Intelligence (AI). t disrupting the industry, but rather leveling it, by strengthening the role of agents and brokers. Galbraith, author of The End of Insurance as We Know It, believes that AI is becoming a central component of business strategy, rather than just a peripheral tool.

The Role of AI in Insurance

Galbraith notes that the industry has gone through several distinct waves of technological change since the early 2000s, and is now entering a period where AI is at the heart of organizations. This shift is enabling greater pricing and underwriting precision, with AI-driven risk assessment replacing generalized actuarial assumptions. For example, telematics is replacing broad proxy variables such as age, gender, and marital status with direct observation of individual driving behavior.

What does this mean for the future of insurance? Can AI fully replace the counsel that agents and brokers provide? Galbraith argues that the stakes of a poor decision in insurance are too high for AI to fully replace human advice. Insurance is a complex and nebulous field, where the cost of getting it wrong is high. In contrast, industries like travel and ground transportation, where technology has eliminated transactional friction, are fundamentally different from insurance.

How will AI change the way insurance companies operate? Will it lead to the elimination of jobs, or will it create new opportunities? These are questions that the industry is grappling with, as AI becomes increasingly central to business strategy.

The Build-Versus-Buy Debate

Galbraith also discusses the traditional build-versus-buy debate, which he believes has become obsolete. Instead, the sharper question is partner versus purpose. He recounts leading a wildfire risk modeling project at a carrier, where an in-house team initially outperformed every commercially available model, only to eventually pivot to outside vendors once dedicated catastrophe modeling companies could out-invest and out-data the carrier’s internal effort.

What is core to a company’s competitive advantage and purpose? This is the question that companies should be asking themselves, rise of low-code and no-code platforms is also allowing subject matter experts, rather than dedicated technical teams, to design and maintain new insurance products directly.

Can this approach lead to greater innovation and efficiency in the industry? How will it change the way companies operate and make decisions? These are questions that the industry is exploring, as it navigates the new landscape of AI-driven insurance.

The Future of Insurance: Fosbury Flop Moments

Looking toward 2027 and beyond, Galbraith believes that the pace of technological change in insurance underwriting and claims automation will continue to accelerate in step-changes, rather than gradual progress. He compares this to Dick Fosbury’s revolutionary high-jump technique at the 1968 Olympics, where a new approach led to a sudden and significant improvement in performance.

What are these Fosbury Flop moments, and how will they shape the future of insurance? Galbraith references a 10-10 rule, under which emerging technology typically takes roughly a decade to move from concept to practical use, then another decade to scale broadly. He suggests that agentic AI may only now be entering its scaling phase, with cloud computing and software-as-a-service tools playing a key role.

Will this lead to a new era of precision and efficiency in the insurance industry? How will it change the way companies operate and make decisions? These are questions that the industry is exploring, as it navigates the new landscape of AI-driven insurance.

What Should You Do About AI in Insurance?

So what does this mean for you? If you’re an insurance professional, how can you prepare for the changes that AI is bringing to the industry? Galbraith’s advice is to focus on what is core to your competitive advantage and purpose, and to partner with outside vendors for everything else.

How can you stay ahead of the curve, and take advantage of the new opportunities that AI is creating? This is a question that the industry is exploring, as it navigates the new landscape of AI-driven insurance.

The future of insurance is not about replacing human advice with AI, but about using AI to strengthen the role of agents and brokers, and to create a more precise and efficient industry.

What do you think? Will AI revolutionize the insurance industry, or will it simply enhance the existing model? The answer, new era of precision and efficiency in the industry.

How Does This Affect You?

The impact of AI on the insurance industry will be significant, and will affect not just insurance professionals, but also consumers. As AI-driven risk assessment becomes more prevalent, consumers can expect to see more personalized and accurate insurance quotes.

But what about the potential risks? Could AI lead to a lack of transparency, or to biased decision-making? These are questions that the industry is exploring, as it navigates the new landscape of AI-driven insurance.

What can you do to stay informed, and to make the most of the changes that AI is bringing to the industry? This is a question that we will continue to explore, as we navigate the new era of precision and efficiency in insurance.

The last thing you need to know about AI in insurance is that it’s not just a buzzword, but a reality that is already transforming the industry. As Galbraith says, AI is not disrupting the industry, but rather leveling it, and creating a new era of precision and efficiency.

Insurance AI – Disclaimer

This article does not replace professional advice. Insurance decisions should be made in consultation with a qualified insurance professional. Outcomes may vary depending on individual circumstances.