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Moody’s warns retail P&C distribution is most exposed to AI disruption
Moody’s says AI is already producing gains in underwriting, pricing, claims management, and capital and reserving analysis, but benefits are likely incremental for insurers overall.
Moody’s Ratings says artificial intelligence poses the highest near-term disruption risk to retail property and casualty, or P&C, distribution, citing high transaction volumes, routine processes, and the commoditised nature of the services.
In its report, Moody’s also said AI is delivering measurable gains in parts of the P&C value chain, including underwriting, pricing, claims management, and capital and reserving analysis, though it characterized overall insurer benefits so far as modest and incremental.
The ratings agency noted that the impact on life insurers is likely to be more muted because of product complexity, longer-dated liabilities, and stricter conduct requirements.
Moody’s cautioned that insurers remain cautious about using AI for core underwriting and reserving decisions, adding that AI can create new exposures faster than it reduces existing ones, including operational, regulatory, and litigation risks, greater vendor dependence, governance complexity, and heightened tail risks tied to data privacy, quality, and security.