The opportunity
Enable more accurate risk assessment through continuous data streams (e.g., from IoT devices, telematics), leading to fairer premium pricing, personalized insurance products, and proactive risk mitigation advice.
From “AI Megatrends - AI In Insurance - A Massive Structural Shift from Risk Assessment to Real-time Underwriting and More!” (April 2023)
The background? The insurance industry was already being rapidly disrupted by tech companies. Existing brokerage and distribution networks are being challenged as more people buy insurance directly online. Predictive analytics is shifting the industry away from actuarial-based historical assessment to real-time coverage. Policy niches, micro-insurance, and just-in-time insurance are driving an increasing number of new revenue models. The Internet of Things (IoT) and massive connectivity are providing for massive market and business model disruption as real-time device reporting provides for instant risk assessment - which allows for lower-cost underwriting. Fast-paced trends involving self-driving cars, the sharing economy, personal drones, swarm-bots, smart dust, artificial intelligence, and augmented reality will either mitigate, accelerate or challenge the very notion of risk assessment and underwriting! What happens when Amazon, Google, or some kid in a garage decides to really change the insurance business model? And then there is the element of risk itself – at a recent global insurance risk summit in Switzerland, I outlined the dramatic new forms of accelerated risk that the industry must now confront (including, obviously the heightened risk of AI itself!)
We are quickly moving into an era of ” performance-oriented insurance ” with policies and pricing based on performance. If you live up to or exceed some performance standard, you’ll get a rebate or reduction on your insurance policy rate. It’s already underway in the field of automotive insurance as a flood of GPS-enabled performance-measuring devices come to inhabit most automobiles throughout the industrialized world. Insurance companies will set a policy price, and then give you a rebate if you exhibit better-than-average driving behavior. Not only that, but Tesla is offering this insurance directly through the technology embedded in the car; others will in the future as well.
Underwriting and actuarial analysis : AI will help in the entire process of moving insurance away from looking back to asses insurance risk (blood test, urine test) to looking in real-time (blood pressure and other real-time health information) to forward-oriented (DNA-based policies); or in automotive, real-time driving behavior. This is a massive change, and through this, we might be able to use AI can help to automate the underwriting process, reducing the time and resources required to evaluate applicants and price policies. For example, AI algorithms can analyze data on a customer’s age, health, and lifestyle to determine their risk profile and determine the appropriate policy pricing.
From “Decoding Tomorrow: The Way Forward: #6 Insurance - “The future of insurance will be written by those who move from predicting the past to architecting the future, transforming risk from a liability to be avoided into an asset to be managed.”” (September 2025)
Think about it - for centuries, the foundation of the industry has been the actuarial analysis of the past—a model that involves looking at what happened, and indemnifying customers based on that reality. That era is over. A powerful convergence of hyper-connectivity, artificial intelligence (AI), and accelerating, complex risk is forcing a new model, in which insurance is underwritten not by looking at the past, but by underwriting risk based on real-time information and concise information on what might happen next.
The shift to predictive analytics . The industry is moving from underwriting based on historical data to real-time risk assessment based on predictive modeling.
The commercial auto sector is being revolutionized by Usage-Based Insurance (UBI) . By leveraging telematics data (i.e. the GPS data), insurers can price risk in real time based on factors like distance traveled and driving behaviors. One study suggests that real-time driver feedback has led to a 15% reduction in accident rates in ride-sharing fleets, while aligning premiums with actual risk has achieved a claims reduction of over 20% and delivered premium savings of 30% to drivers.
From “Keynote - AI In Insurance - Brokers & Reinsurance Markets Association, Orlando, Florida” (February 2023)
The insurance industry is already tightly linked to AI - it’s used for risk management, market analysis, and predictive analytics. Yet the big change occurring in the industry is a shift to real-time underwriting based on real-time risk analysis - think about connected cars which provide discrete information on driver activity, or healthcare bioconnectivity which provides real-time insight into healthcare risk. Jim took the CEOs of the top reinsurance and insurance companies in North America on a tour of what happens as AI comes to accelerate this fundamental disruption.
Read the full pieces on jimcarroll.com:
AI Megatrends - AI In Insurance - A Massive Structural Shift from Risk Assessment to Real-time Underwriting and More!
Decoding Tomorrow: The Way Forward: #6 Insurance - “The future of insurance will be written by those who move from predicting the past to architecting the future, transforming risk from a liability to be avoided into an asset to be managed.”
Keynote - AI In Insurance - Brokers & Reinsurance Markets Association, Orlando, Florida