Insurance industry ‘right on the cusp’ of using AI for improved underwriting judgement

The insurance industry is “right on the cusp” of using artificial intelligence (AI) for improved underwriting judgement, according to Amrit Santhirasenan, co-founder and chief executive at Hyperexponential (Hx).

Santhirasenan made the comments after the insurtech released its State of pricing 2024: Mind the gap report in September 2024, which revealed that almost three quarters (69%) of underwriters were concerned that they would be replaced with AI in the next five years.

However, Santhirasenan felt the ”market is only just coming around” to see the uses of AI when it comes to improving and supporting underwriting judgement.

He used energy risks as an example, stating that within the next year, AI ”is going to have PhD level insight to be able to generate” questions that an underwriter could pose to a broker.

He said: “That is going to drive an extraordinary revolution in the sophistication of underwriting judgement.

”It’s an extremely exciting thing. Improved underwriting judgement has benefits to insurance companies. It has benefits to the consumer, including fairer pricing [and] faster results.

“We’re just right on the cusp of being able to do that [and] there’s going to need to be some incredible technology to facilitate that. I’d hope we’d be one of the leading providers of this in the future.”

Protection gap

Santhirasenan also believes that AI could help close protection gaps.

He said the cyber insurance market was the most obvious gap, but that the protection gap in climate change risk was also “extremely complex “and “fast changing”.

Santhirasenan added: “We have a huge gap in protection in the market, [so] the idea that the robots are going to leave us with nothing to do [and then] there’s no more insurance to underwrite – it just makes me laugh.

”In my mind, a drive in productivity and improved judgement just allows us to insure more.

“We haven’t even scratched the surface.”