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Jefferies flags reinsurers as AI implementation safe haven
Jefferies said reinsurers may be harder for AI underwriting to replace directly, but could still be exposed indirectly if AI shifts customer demand.
Jefferies analysts said reinsurers are being viewed as a “safe haven” from risks tied to AI implementation, while cautioning that the business could face structural pressure if AI changes competitive dynamics across insurers, Reinsurance News reported.
In a research paper, Jefferies cited two reasons reinsurers are less directly substitutable by AI for underwriting: the data needed to underwrite reinsurance risks is not easily available, and the reinsurance market is sophisticated with relatively few touchpoints.
The analysts also argued that AI disruption may show up first through distribution, because underwriting incumbents could need to ensure their market share in existing channels transfers successfully to new AI platforms.
Still, Jefferies stressed that reinsurers are indirectly exposed through customer demand, even if they are not easily replaced in the underlying underwriting process.