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Moody’s says AI benefits for insurers will be gradual, not transformative
Moody’s expects AI to affect areas from underwriting and claims to capital and reserving analysis, with new operational, regulatory, and cybersecurity risks.
Moody’s Ratings says artificial intelligence has the potential to improve efficiency and reshape the insurance sector over the long term, but it expects near term financial gains to stay modest.
In its latest report, Moody’s says insurers are already using AI in selected parts of their operations, including underwriting and pricing, claims management, and capital and reserving analysis. It expects wider adoption to raise productivity and reduce operating costs, particularly for property and casualty insurers.
Moody’s also flags risks that could come with AI rollout, including new operational, regulatory, and cybersecurity challenges. It adds that retail P and C distribution is the area most likely to face disruption soon, citing high transaction volumes and routine, standardized processes.
For life insurers, Moody’s expects a more limited impact, pointing to the complexity of life products, longer term liabilities, and stricter conduct requirements. The ratings firm also warns that in highly competitive markets, insurers may not retain all efficiency gains, and it expects AI to widen performance gaps between firms with strong data infrastructure and the ability to redesign processes around AI.