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The use of artificial intelligence (AI), including generative AI (predominantly large language models) and agentic AI (autonomous agents making decisions without human input), is expanding rapidly. The volume of commentary on AI’s impact on insurance is growing almost as fast. Most of this commentary to date has focused on the transformative power of the technology to improve efficiency and productivity, as well as reduce costs and streamline workflows within the insurance industry and beyond. This has positive consequences of higher margins, improved customer experience, and reduced waste. Clearly, there are also negative potential implications relating to employment and training prospects. The purpose of this paper is to shift the conversation from the changes AI will have on insurance industry processes to the consequences AI itself will have in expanding, evolving, and shifting risk. Established paradigms for insurance products are being dismantled. Boundaries for coverage are blurred. The implications are wide-ranging, and our understanding of the risks is still limited. There is a myriad of different short- and long-term effects, both intended and unintended.   Click here to access the report.

New Report from Lockton Re Ready or Not: The Impact of Artificial Intelligence on Insurance Risks 

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Ready or Not: The Impact of Artificial Intelligence on Insurance Risks 

Report examines why probabilistic AI systems challenge traditional insurance constructs and calls for clearer risk classification.  LONDON, FEBRUARY 5th, 2026—Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker in collaboration with Lockton International and Armilla AI, a pioneer in insurance solutions for artificial intelligence, has released a new report, Ready or Not: The Impact of Artificial Intelligence on Insurance Risks, examining how the rapid adoption of artificial intelligence is reshaping insured risk across commercial lines.  Oliver Brew, Co-Author and Head of Cyber Centre of Excellence, Lockton Re, said “The benefits of AI are clear. It’s also important to recognise that AI is fundamentally different to traditional software. The probabilistic nature of AI and its ability to synthesize massive amounts of data mean it is prone to errors, which will have huge implications wherever implemented. There are no sectors of the economy that are insulated from the potential impact of AI. As an industry we need to prepare for how these rapidly evolving risks are underwritten across commercial insurance and what emerging claims patterns will look like. The current lexicon and frameworks for insurance products and risk categories were not designed with these systems in mind and are increasingly misaligned with how AI-related losses occur.” The report maps AI-related exposures across key commercial classes, highlighting areas where coverage may be silent, fragmented, or misaligned with how AI failures manifest in practice. It also explores systemic risk considerations arising from shared AI infrastructure, common foundation models, and correlated model behaviour across portfolios.  Baiju Devani, Co-Author and CTO & Cofounder, Armilla AI, said, “The underwriting of AI risk needs to consider the novel perils created. Even if we recognise the peril, there is a growing gap between what insurers intend to cover and what they actually cover. The underwriting toolkit needs to develop at pace to model and price AI risks. Additionally, the challenge for the insurance industry is not whether AI will create systemic risk events, but when, and if underwriting practices can keep pace. AI risk concentration operates through different mechanisms than traditional commercial insurance.” The report includes a detailed claim scenario involving an AI-powered customer service chatbot that generates incorrect warranty commitments without any system breach or malicious activity illustrating how AI-driven losses can fall outside traditional cyber and liability triggers while still creating material financial and regulatory exposure.  Karthik Ramakrishnan, CEO & Cofounder of Armilla AI, explained “the report highlights how ambiguity in insurance contracts reduces the perceived value of coverage as AI systems move into core business decision-making. The silence in policy language creates uncertainty when claims arise. Both insurers and policyholders benefit from greater clarity in how AI-related risks are addressed to support responsible adoption of the technology.”  The report emphasises now is the time to consider AI as its own category of risk classification, developing policy solutions that address exposures directly while also future proofing coverage in a manageable way.  Read the report here.

Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker in collaboration with Lockton International and Armilla AI, a pioneer in insurance solutions for artificial intelligence, has released a new report, Ready or Not: The Impact of Artificial Intelligence on Insurance Risks, examining how the rapid adoption of artificial intelligence is reshaping insured risk across commercial lines

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New Lockton Re & Armilla Report ‘Ready or Not’, Finds AI Is Reshaping Insurance Risk and Coverage Frameworks

NEW YORK, JANUARY 29, 2026 - Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker, is pleased to announce that Lockton Re‘s SAGE, the company’s proprietary analytics platform has been awarded another US Patent for systems and methods for custom and real-time visualization, comparison, and analysis of insurance and reinsurance structures, with additional patents pending. 

“Lockton Re’s SAGE was inspired by our clients, who desired better analytics to support more informed risk transfer decisions.​ The unique software optimizes efficient decision-making, offering our clients flexibility, deep insights, and financial benefits,” said Adam Troyer, Global Head of Analytics, Lockton Re. 

The key features of the platform enable clients to make faster, more informed decisions, providing unprecedented transparency and efficiency. 

Claude Yoder, Chief Digital Officer at Lockton, commented on the new patent, “Analytics has been central to Lockton Re's value since its inception in 2019, and Lockton Re’s SAGE has been on the cutting edge of what is possible ever since.” 

With data transformed into real-time financial results for risk transfer decision making, the platform allows clients to visualize, design, and modify different structures to help optimize risk portfolios. Built on a modern stack with a future-ready framework, Lockton Re’s SAGE has and will continue to catalyze growth across the entire marketplace. 

“Lockton Re’s SAGE platform stands out for supporting clients as data and analytics become increasingly vital within the (re)insurance industry. Securing our latest US software patent is a testament to the pioneering spirit of our Global Analytics team and our autonomy as an independent organization. The power of our independence allows us to prioritize the digital initiatives that deliver the most significant returns for our clients, and that legacy-bound organizations simply cannot match,” added Claude Yoder. 

Lockton Re’s rapid innovation cycle has yielded three US patents in three years. This trend is set to continue as the organization advances a significant slate of additional patents through the pending stage.

Lockton Re, the reinsurance business of the world’s largest privately held independent insurance broker, is pleased to announce that Lockton Re‘s SAGE, the company’s proprietary analytics platform has been awarded another US Patent for systems and methods for custom and real-time visualization, comparison, and analysis of insurance and reinsurance structures, with additional patents pending.

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Lockton Re’s SAGE Awarded Another US Patent, Strengthening its Position as a Digital-Led Broker and Leader in Developing Sophisticated, Modern Analytics

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