Insurance
Home›Insurance›Industry & Deals›AI shift raises stakes for commercial insurers that on…
AI shift raises stakes for commercial insurers that only license tools
Pie Insurance CEO John Swigart argues AI lowers the cost of in-house software building, but proprietary underwriting models still require large data, capital, and scale.
Artificial intelligence is changing what differentiates commercial insurance carriers, pushing software development beyond pricing sophistication alone, according to Insurance Business. Pie Insurance CEO John Swigart said AI makes it possible to build new capabilities internally at lower cost, challenging the long-running reliance on third party tools.
Swigart warned that carriers that only license vendor software will struggle to differentiate, because AI can enable an organization to form an in house software development capability more quickly than before. He said AI effectively democratizes building proprietary tools that were previously the domain of insurers with large engineering teams.
The executive described an ongoing tension in small commercial insurance between buy versus build for modeling tools. He leaned toward bespoke underwriting models where a carrier has genuine specialization, but said that approach depends on massive volumes of data, including data outside the organization that often must be licensed.
Swigart also pointed to structural barriers for smaller insurers, saying building proprietary models requires the ability to invest up front and absorb underwriting losses while models mature. He added that commercial lines have less developed third party data compared with personal auto, and that the broad variety of business risks leaves manual operational work persisting even at carriers that appear technologically up to date.