AI not behind insurance layoffs: AM Best
It is too soon to cite Artificial Intelligence (AI) as the leading cause of recent insurance industry job losses, though such automation will impact industry employment as AI capabilities broaden and insurance companies become more comfortable using it, AM Best says.
Hiring levels are declining and layoffs appear to be rising across the insurance industry, but for now job losses are due to employment fluctuations driven by business cycles, rather than adoption of technology, AM Best says.
In October, hiring in the US insurance industry and related fields slowed to around a quarter of those hired in September, and an eighth of July hires.
Personal lines writers, including auto and homeowners’ insurers, are the most affected, as loss ratios and underwriting margins are pressured by loss cost inflation, reinsurance capacity and pricing, and rising climate risk.
“As AI capabilities broaden and insurance companies become more comfortable using AI for business processes, either through their own efforts or by outsourcing, automation will impact industry employment levels and a much wider set of occupations,” Director Edin Imsirovic said.
Customer service, policy generation, claims handling and areas that use document and image processing could also be enhanced by the advent of large language models, with Generative AI able to write code, create marketing content, analyse legal documents and provide customer service.
AI can also identify trends in risk profiles and develop tailored solutions for each customer.
As AI transforms insurance underwriting, boosts efficiency and improves accuracy, it creates potential for insurers to “minimise, if not eliminate human touch points”.
Such AI-related advances will “gradually reshape the outlook for insurance industry employment,” the agency says.